The Luxembourg-based investment firm JPMorgan Asset Management announced the launch of the JPMorgan global equity premium income Ucits ETF on Wednesday 6 December 2023. This actively managed ETF aims to provide investors with a consistent annual income of 7%-9%, paid monthly, and potential capital appreciation with less volatility compared to its benchmark, stated JPMorgan.
The fund will combine equities with options to balance yield, capital growth and risk. The equity portfolio, managed by Piera Elisa Grassi and Nicolas Farserotu, will take insights from over 90 research analysts, covering around 2,500 securities globally, said JPMorgan.
To generate income, an options strategy will be applied. Hamilton Reiner, Judy Jansen and Matthew Bensen, who will be responsible for managing the options component, will sell index options against the equity portfolio. The options, a mix of S&P500 and MSCI EAFE, will contribute to income generation through premiums. Reiner, who leads the structured equity solutions team, oversees some of the world’s largest options strategies, including a $30bn US-domiciled equity premium income strategy as of 30 November 2023.
The ETF will adjust its strategy weekly by selling call options, allowing it to respond to market changes. During periods of high volatility, this approach can potentially offer higher income, providing a cushion against price fluctuations.
In the firm’s announcement, Travis Spence, head of ETF distribution in EMEA at JPMorgan, highlighted that the newly launched ETF meets investor demand for high income and stock market exposure with reduced volatility. He outlined three benefits of the equity fund: consistent income generation, a conservative equity solution with lower beta and volatility and an alternative to bonds, offering high income without duration risk.
The JPMorgan global equity premium income Ucits ETF was domiciled in Ireland and listed on the London Stock Exchange and Borsa Italiana on its launch date. It features a total expense ratio of 35 basis points and is scheduled to be listed on Deutsche Börse Xetra and Swiss exchange SIX on 7 and 20 December, respectively.