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JP Morgan AM Launches Suite of China ETFs

J.P. Morgan Asset Management (JPMAM) has launched a diversified suite of China exchange-traded funds (ETF) to enable global investors to take advantage of opportunities in the rapidly developing market, according to an official statement.

Recently listed on various European exchanges, including the London Stock Exchange, were JPM BetaBuilders China Aggregate Bond UCITS ETF (JCAG), JPM RMB Ultra-Short Income UCITS ETF (JCST), and JPM China A Research Enhanced Index Equity (ESG) UCITS ETF (JREC). In additional to the launch of China fixed-income ETFs, the firm also listed a China equity ETF, JREC, on various European stock exchanges in February.

“We are excited to offer JCAG and JCST – two differentiated and innovative fixed-income ETF products to global investors who are seeking to have both active and beta exposure to China’s fixed-income universe, a US$20.7 trillion market currently under-represented in global investors’ portfolios,” says Sean Cunningham, head of Asia ETFs at JPMAM.

JCAG aims to offer investors liquid, beta exposure to China’s vast fixed-income universe by closely tracking the Bloomberg China Treasury + Policy Bank + Liquid IG Credit Issuers Index, which predominantly consists of China’s government and policy bank bonds, while maintaining dynamic exposure to corporate bonds, according to the statement.

JCST is an actively managed ETF and the latest addition to JPMAM’s ultra-short duration ETF range, which includes JPMorgan Ultra-Short Income ETF (JPST) – its flagship and biggest ETF with approximately US$19 billion in assets. The fund invests in a range of Chinese short-term investment-grade securities, including government bonds, investment-grade corporate bonds and money market instruments, with a short duration, high quality and diversified investment style. It looks to provide current income through exposure primarily to low-volatility, short-duration yuan-denominated debt securities.

According to JPMAM, fixed-income ETFs present potential compelling benefits to investors facing diversification, liquidity or pricing challenges: they standardize bond investing with simplicity and transparency, provide an effective way to diversify and make strategic or tactical portfolio allocations, and present liquidity benefits compared to transacting directly in the underlying bond markets.

JREC is benchmarked against the MSCI China A Index and designed to maintain index characteristics while seeking incremental positive excess returns in a risk-managed environment, helping investors capture China A-share opportunities in an easy-to-trade and attractively-priced active ETF wrapper. The firm says it is the industry’s first active China equities ETF and part of its flagship range of active research-enhanced index equity ETFs.

The ETF is managed by Lina Nassar and Sonal Tanna from JPMAM’s emerging markets and Asia-Pacific equities team. It also integrates systematic and explicit consideration of ESG factors, which are built into the investment decision-making process from the outset.

In February, JPMAM launched two actively-managed ETFs, the JPM China A Research Enhanced Index Equity ESG UCITS ETF (JREC) and the JPM AC Asia Pacific ex-Japan Research Enhanced Index equity ESG UCITS ETF (JREA).

Flows into China bonds have been turbulent in the first few months of 2022. The iShares China CNY Bond UCITS ETF (CNYB) raked in $1.1bn assets in January before recording outflows of roughly $750m over the past month, according to data from ETFLogic.