JP Morgan Asset Management (JPMAM) has listed its Global Equity Premium Income Complex ETF (JEGA) on the ASX, which seeks to offer investors consistent income between 7 per cent and 9 per cent annualised, and appreciation potential with less volatility than the benchmark.
In a statement on Thursday, JPMAM said JEGA combines equities with options to balance yield, capital growth, and risk.
The fund belongs to the same equity premium income suite as the JPMorgan Equity Premium Income (JEPI), the world’s largest active ETF, and its Nasdaq 100 equivalent, JPMorgan US 100Q Equity Premium Income Active ETF (Managed Fund) (JPEQ).
According to the asset manager, JEGA’s long-only equity portfolio leverages its expertise in active equity strategies, which sit at the “intersection of active and passive investment management”.
“Investors continue to seek high levels of income, but they also want exposure to stock markets with less volatility,” said JPMAM ANZ head of wholesale Mark Carlile.
“We have seen the rapid growth in our option overlay US equity strategies over the past couple of years, and we are delighted to bring a global equity version to join our equity premium income suite of products. Australian investors, who have long enjoyed dividend income from domestic equities, now have the opportunity to earn income from their international equity investments.”
He outlined the three ways in which JEGA aims to meet investor needs: by delivering a consistent stream of income from monthly payouts; offering a low beta, lower volatility underlying equity portfolio; and by seeking to deliver high income comparable to high yield credit strategies.
Namely, portfolio managers Piera Elisa Grassi and Nicholas Farserotu will be tasked with taking small overweight positions in attractive names and small underweights in less attractive names, relative to an index, to build a higher-quality, lower-beta portfolio that is well-diversified across regions and sectors.
JPMAM said that an options strategy is then applied to JEGA, where portfolio managers Hamilton Reiner, Judy Jansen, and Matthew Bensen will sell index options – a combination of S&P 500 and MSCI EAFE – against JEGA’s long-only equity portfolio and use the premiums to generate income opportunities.
“Together with JEPI and JPEQ, the launch of JEGA adds another dimension to our already strong equity premium suite of strategies,” JPMAM ANZ chief executive Andrew Creber said.
“For those who are seeking income, or income with lower volatility or simply to diversify their equity exposure, these objectives may be met by adding any one of these strategies or a combination of all three to a portfolio.”
The launch comes after JPMAM closed down two of its products – the JP Morgan Global Macro Sustainable Fund, Sustainable Infrastructure Fund - Class A Units and Sustainable Infrastructure Active ETF (Managed Fund) – earlier this week.
Following a recent review of the funds, JP Morgan stated that they had not gathered sufficient assets and had “limited prospects” for future growth.
