In the last 3-4 weeks, it appears that the floodgates have opened for the actively-managed ETF sector, with nearly every week bringing a new announcement of a major player putting their chips on the table and filing to launch Active ETFs. March 10th marked the entry of JP Morgan into the ETF industry as it filed with the SEC to launch index as well as actively-managed ETFs.
JP Morgan’s “initial” Active ETF product will look to invest in large cap equities in the US while utilizing both valuation and fundamental quantitative measures for selection. The fund intends to hold approximately 300 securities while overweighting inexpensive but fundamentally strong stocks and underweighting the opposite.
As this WSJ article points out, it appears that no one wants to be left out of this race. In the 3rd week of February, RiverPark Advisors filed to launch two Active ETF products. The following week brought the news that mutual fund giant Legg Masson has also filed to launch a “series” of active ETF products. Then came the announcement from Eaton Vance earlier this week alongside releases about AdvisorShares’ plan for 2 more Active ETF launches in April. And finally, the filing from JP Morgan wrapped up the week. This is not to mention all the huge players like Goldman Sachs, T. Rowe Price, John C. Hancock, Putnam Investments and Vanguard who made their intentions to enter the Active ETF space clear much earlier. While a lot of the these managers could just be hedging their bets and filing for exemptive relief to launch Active ETF products “just in case” they gain traction, their mere entrance into the arena and fear of missing the boat serves as an endorsement for the Active ETF market.
So while there are only 5 issuers offering Active ETFs right now, that number could easily triple in this year alone. At the moment, JP Morgan only has one listed product – the JP Morgan Alerian MLP Index ETN (AMJ), which is not really a JP Morgan product because it came as a part of the Bear Stearns purchase in 2008.
Disclosure: No positions in above-mentioned names.
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