Bond Upgrade: JPMorgan Debuts Premium Bonds Fund

Offering Money

Investors seeking security in high-quality bonds have a new purpose-built exchange-traded fund (ETF) to consider.

Last week, JP Morgan launched the JPMorgan Active Bond ETF (“JBND”) on the New York Stock Exchange, Arca. JBND is an actively managed portfolio that holds U.S. investment-grade bonds of intermediate- and long-term duration. It focuses primarily on securitized debt. 

JBND has set its sights on beating the Bloomberg US Aggregate Bond Index (also known as “the Agg”) over a three- to five-year market cycle. The launch comes as investors grapple with an enduringly high interest-rate environment and recent volatility in the bond market.

Richard Figuly, Justin Rucker, Andrew Melchiorre, and Edward Fitzpatrick III, make up the four lead portfolio managers. 

“Being able to deliver our strong core bond investment team capabilities through the ETF wrapper is an excellent innovation for our clients,” JPMorgan’s Global Head of ETF Solutions Bryon Lake said of the fund. 

“JPMorgan has climbed the ETF leader board due to their active ETF lineup,” said VettaFi’s Head of Research Todd Rosenbluth of the news. “We are seeing strong demand for fixed income ETFs in 2023. It’s exciting to see asset managers like JPMorgan bring more active strategies into the ETF market.”

Interest-ing Year 

It’s been a strong year for JPMorgan so far. America’s biggest bank reported a stunning 35% leap in profits for the third quarter of 2023. Higher interest rates over the past 18 months have helped it supercharge its “net interest income.” Banks do this by charging borrowers much more for loans while barely bumping the interest rates given to savers for their deposited money.

Its active ETFs are also seeing revenue rolling in. The JPMorgan Equity Premium Income ETF (“JEPI”) alone has seen nearly $1 billion in inflows over the past month, as it reaches nearly $30 billion in total assets. JEPI and JPMorgan Ultra-Short Income ETF (“JPST”) are the two largest active ETFs globally. 

Yet that isn’t stopping JP from issuing more still. The bank has continued to expand its suite of active ETFs this year. Just last month, JPMorgan fired off a laddered options strategy fund, the Avantis U.S. Large Cap Equity ETF, under the friendly-sounding ticker “HELO.” 

It has also been pushing its other bond funds to get active. In August, it transitioned the JPMorgan Global High Yield Corporate Bond Multi-Factor Ucits ETF into an active strategy (from smart beta – a type of rules-based passive strategy).

JPMorgan is predominantly an active house, so this will “play to their strengths,” said HANetf's Hector McNeil of the switch. 

JBND comes with an expense ratio of 0.30%

Author: Liam Gibson

Bio:

Liam is an experienced journalist in Taiwan who has been covering politics, economics and finance professionally for almost five years. His writing has appeared in many leading publications in both the U.S., Asia, the Middle East, and elsewhere. He currently works as a finance writer for Wealth of Geeks. He formerly ran the Substack newsletter and podcast, Policy People