In a week when investors are grappling with policy uncertainty amid President-elect Donald Trump’s decisive victory, JPMorgan has launched a popular Equity Premium Income ETF in Europe to help protect against volatility while capturing some upside. . J.P. Morgan Asset Management’s U.S. Fund, already the world’s largest active ETF, returned 21.5% in 2021, including 8.15% in revenue. In 2022, when the S&P 500 nearly fell into a bear market, the fund lost only 3.5% of its value. In addition to capital appreciation, the fund has delivered income returns of 7% to 9% over the past few years. The JEPI 5Y Line fund achieves such consistent returns for investors using complex selection strategies that create what fund managers call “asymmetric” returns. “There’s an asymmetry to this strategy,” Hamilton Reiner, the fund’s lead portfolio manager, told CNBC. “Having a strategy that gives you positive, upside-down capture differences is very valuable. , whether in a down market, a flat market, a rising market, but in all markets.” The fund maintains a stock portfolio that roughly tracks the S&P 500 Index. It then combines this with a selection strategy to sell index call options contracts on approximately 80% of the portfolio to generate additional income. While the fund’s goal is not to outperform the S&P 500 in a strong bull market, the strategy typically operates with about two-thirds of market volatility and reduces downside risk while still capturing a significant portion of the upside risk . JPMorgan launched the ETF on the London Stock Exchange, Germany’s Deutsche Börse and Switzerland’s Six Exchange this week to enable European investors to take advantage of the popular strategy. The fund currently manages $36 billion worth of assets in the United States, with $4 billion flowing into the fund last year alone. The strategy’s expansion into Europe comes as investors across the continent increasingly look for income-generating alternatives. “Investors across Europe are very hungry for yield,” said Travis Spence, global head of ETFs at JPMorgan Asset Management. Spence emphasized that JPMorgan did not deliberately choose to enter Europe during one of the most volatile weeks of the year for global markets. . In addition to the impact of the U.S. presidential election on the market, the Federal Reserve’s interest rate decision on Thursday is expected to also affect the stock market. “Whether it’s this week, last week or ten weeks from now, the (stocks) in the long portfolio will be higher quality, more defensive in nature and have predictable returns. Our holdings will not be skewed red, Blue or purple,” Reiner stressed, underscoring the strategy’s political indifference to American politics. “Our holdings are designed to take this fundamentally bottom-up approach,” he added. The strategy’s success has also increased investor interest in similar funds from rivals. One such fund is Global X’s covered call ETF XYLD, which has slightly outperformed JPMorgan’s JEPI over the past two years. However, the Global X ETF, which has been active since 2013, has significantly underperformed JEPI in 2021 and 2022. Reiner dismissed concerns about increased competition and said JPMorgan’s size and infrastructure gave it an advantage. “At a place like JP Morgan, if you want to do options strategies, you need a strong middle office, back office, clearing, custody, collateral management, cash management, corporate actions, markets team and trading team to do this “Things,” he explains. “Many of our imitators or competitors actually address the most important part of investing: investing! “We’re not driven by revenue levels or fees. We’re driven by a consistent experience with our customers, and I think that’s one of the key differentiators,” Spencer added.
