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Rating:A Titan Preps a $9.7B-AUM MF-to-ETF Conversion Not Rated 5.0 Email Routing List Email & Route  Print Print
Wednesday, August 11, 2021

A Titan Preps a $9.7B-AUM MF-to-ETF Conversion

Reported by Neil Anderson, Managing Editor

A money center bank's $2.6-trillion-AUM asset management arm is preparing to convert a $9.7-billion-AUM quartet of active mutual funds into traditional, transparent ETFs.

George Gatch
J.P. Morgan Asset Management
This morning, George Gatch, CEO of J.P. Morgan Asset Management [profile], unveils plans to transform four funds. Gatch's team is also proposing unifying all of JPMAM's mutual funds (129 funds and $899 billion in AUM as of June 30) and ETFs (36 funds and $64 billion in AUM) under a single board with 16 directors.

The traditional mutual funds targeted for conversion are: the $1.4-billion-AUM JPMorgan Inflation Managed Bond Fund (PMed by Scott Grimshaw, Steven Lear, and David Rooney); the $5-billion-AUM JPMorgan International Research Enhanced Equity Fund (PMed by Winnie Cheung, Nicholas Farserotu, and Piera Elisa Grassi); the $1.1-billion-AUM JPMorgan Market Expansions Enhanced Index Fund (PMed by Wonseok Choi, Akash Gupta, Phillip Hart, and Jonathan Tse); and the $2.2-billion-AUM JPMorgan Realty Income Fund (PMed by Scott Blasdell and Jason Ko). All four would, in ETF form, use the traditional transparent ETF structure (not any of the translucent or "active non-transparent," i.e. ANT ETF structures).

The board unification, fending shareholder approval, is slated for early next year. The four fund conversions is also slated for 2022, but only pending board approval.

"J.P. Morgan Asset Management is announcing the proposed conversion plans well in advance to provide shareholders and distributors with ample notice of the planned conversions and to allow them time to engage with J.P. Morgan on the implications of this important effort," the JPMAM team writes. "It is anticipated that if the conversions are approved by the boards of the funds, they would not require shareholder approval prior to implementation."

"We are positioning ourselves to deliver our best investment capabilities more rapidly through a broader range of vehicles including mutual funds and ETFs," Gatch states. "The combination of the mutual fund and ETF boards will allow shareholders to benefit from the boards' substantial combined experience and better position us to deliver the highest value-add capabilities in a rapidly evolving industry."

Bryon Lake, head of Americas ETFs at JPMAM, puts the conversions in the context of meeting "clients' desired outcomes" by delivering strategies in the right vehicles. He notes "the intraday liquidity, transparency and potential tax benefits" of ETFs.

"These particular strategies are well suited for the ETF structure," Lake states.

"Select, thoughtful conversions have the opportunity to positively impact the shareholders' experience, and that is always our goal," states Jed Laskowitz, global head of asset management solutions at JPMAM. 

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