<p>Advancing the possibilities of ETFs </p>

An evolution is happening in investing with the explosive growth of Exchange-Traded Funds (ETFs). Explore below to learn the basics of this new investment vehicle.

Introduction to ETFs

What is an ETF?

An Exchange-Traded Fund (ETF) is an investment wrapper which combines the benefits of a fund and a stock.

A fund offers:

Diversified exposure
Economies of scale
Professional management

A stock offers:

Liquidity
Transparency
Trading flexibility

stock-etf-bond — Source: J.P. Morgan Asset Management. Shown for illustrative purposes only.

How does an ETF work?

The structure of the ETF wrapper provides greater opportunity for improved economics.

In-kind creations/redemptions, where securities are exchanged for ETF shares, contribute to the cost-effectiveness of ETFs
Market-makers help mitigate outsized premiums/discounts of the ETF market-price to the ETF net asset value

Chart 4-reworked — For Illustrative Use Only. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them.

Type of ETFs

different-types-of-etfs — *Source: J.P. Morgan Asset Management. Shown for illustrative purposes only.

How do ETFs trade:

ETFs offer more liquidity than meets the eye.

What are active ETFs?

When looking at active ETFs, it is first important to note that terms such as “ETF”, “passive” and “index” are not synonymous. ETF simply means Exchange-Traded Fund, which means an ETF is traded at an exchange regardless of the investment strategy used.

A variety of “engines” or strategies can therefore be placed in the ETF structure to leverage its benefits.

“Active” refers to specific investment decisions, which are designed to achieve specific outcomes, such as outperforming an index (Alpha), generating income, or achieving control in terms of duration, yield or credit quality.

An active ETF provides access to these specific outcomes, all while maintaining the attributes of the ETF structure.

The ETF is just a wrapper and the content itself is independent of the vehicle

Source: J.P. Morgan Asset Management. For illustration purposes only. The ETF aims to replicate the performance of an index however its market price can be different from its net asset value and from the net asset value of the index.

Active ETFs overview

Why invest in active ETFs?

Demand for active ETFs

Active ETF assets have grown sharply in recent years. At the end of 2017 the global assets under management were only at $58bn US dollar, growing to $565bn US dollar end of 2023.¹

¹ Bloomberg; Data as of 29 December 2023, US & UCITS only.

Getting to know an active ETF

Getting started

Useful information to consider when investing in active ETFs

A leader in ETF investing

At J.P. Morgan, we’re combining the built-in benefits of ETFs with our best-in-class research insights, portfolio expertise and trading capabilities.

Expertise

Bringing decades of portfolio management expertise to a variety of ETFs with over $120 billion in AUM globally¹.

Innovation

Offering a growing suite of ETFs, with a focus on active solutions, that span all major asset classes and regions.

Success

A long history of solving investor needs across changing markets.

¹ J.P. Morgan Asset Management, as of March 31, 2024.

Investment approach

Market Insights