With active fixed income ETFs becoming an essential tool for investors seeking to generate returns in an increasingly complex market landscape, our JPM USD High Yield Bond Active UCITS ETF (JPHY) and JPM EUR High Yield Bond Active UCITS ETF (JEHY) have been designed to provide investors with active exposure to the attractive yield and total return potential of the US and Europe high yield markets.
Active management is crucial in high yield
The US dollar and euro high yield bond markets present attractive long-term opportunities for investors. However, because of the asymmetric risk profile of high yield bonds, active management is crucial for investors looking to better navigate the complexities of the high yield landscape. Actively managed high yield ETFs can look to capitalise on market inefficiencies as well as minimise default losses through security selection.
High yield bonds are issued by sub-investment grade companies, with credit ratings below BBB-. While high yield bonds, in general, offer higher yields to compensate investors for their increased default risk, the composition and complexity of the market can lead to significant dispersion in the performance across issuers and sectors. This dispersion creates opportunities for active managers to add value through fundamental credit research, disciplined security selection and rigorous risk management.
Unlike passive strategies that track an index, active high yield ETFs can adjust their portfolios in response to changing market conditions, issuer fundamentals and economic cycles. This flexibility allows active managers to avoid potential pitfalls associated with passive strategies, such as overexposure to the largest (and therefore most indebted) issuers or sectors. Passive exposure to highly leveraged companies in secularly challenged businesses, for example, can result in credit loss, whereas active managers can aim to avoid these risks.
The advantages of active high yield ETFs
By focusing on long-term fundamentals rather than short-term market movements, active management can provide a more stable and resilient investment approach to high yield markets. However, combining active management with the ETF wrapper can be particularly advantageous for investors looking to optimise their high yield allocations.
Active ETFs provide daily transparency of holdings, which enables investors to easily perform portfolio attribution and analyse their investment’s performance, and they offer intra-day liquidity, which can enhance price discovery in less liquid markets, such as high yield.
Furthermore, since active ETFs trade on exchanges, which act as centralised markets to efficiently and transparently match trading partners, an active secondary market can serve as an efficient mechanism for alleviating turnover in the underlying bond portfolio, reducing the need for creating or redeeming shares. Less turnover means less trading costs, which can eat into a fund’s performance.
J.P. Morgan Asset Management’s active high yield strategy
At J.P. Morgan Asset Management, our active high yield strategy is founded on proprietary fundamental research and bottom-up security selection. A central tenet is our focus on the imbalance between the risk and reward in high yield bond returns. Given this asymmetric return profile, our emphasis is on downside risk mitigation when selecting credits, based on a rigorous, disciplined and repeatable investment approach along with strong risk management.
We consider a variety of factors when selecting securities, including industry outlook, company financials, management quality and capital structure. This in-depth credit analysis involves engaging with company management, customers and suppliers to gain insights into the issuers that we invest in, as well as comprehensive due diligence.
Our research is complemented by proprietary credit models and industry comparative analyses, which help us to assess relative value and optimise portfolio construction.
While portfolio decision making is ultimately the responsibility of our specialist high yield portfolio managers, we employ a team-based approach to identify and price the risks associated with every investment we make, backed by proprietary risk management tools and techniques.
Crucially, we look to avoid structural portfolio biases, such as tilts towards quality or sectors, focusing instead on generating alpha from security and sector selection. This research-driven approach has proven successful in identifying undervalued securities in both risk-seeking and risk-averse market environments.
How our high yield ETFs are positioned for today’s uncertain markets
In today’s environment—characterised by heightened geopolitical uncertainty and AI-driven disruption— sector and quality performance in high yield markets has diverged significantly, creating a more favourable backdrop for active managers to add value through issuer and security selection. As Exhibit 1 shows, since the start of 2026 technology and financials have lagged, while energy has led in US high yield.
In our US high yield strategy, coming into 2026 we were underweight financials and technology. In financials, positioning was driven by the fact that issuers typically carry higher leverage, operational complexity and niche product exposure, resulting in weaker credit profiles. In technology, underweight positioning was driven by typical sponsor-heavy capital structures.
At the same time, our active approach has allowed us to remain tactical with our exposure to CCC rated and lower securities, which have struggled in recent months, as Exhibit 2 shows. Nevertheless, while many CCC rated issuers are priced to default, some are performing well, and investors have to get that call right. Our experience suggests that the reward for being long and right on an investment decision rarely compensates for the downside of being long and wrong.
We have therefore favoured names in this space that we believe have stronger fundamentals and have the potential to rise in rating compared to the broader cohort of issuers, which face headwinds for various structural reasons.
J.P. Morgan Asset Management’s high yield platform
When it comes to choosing an active high yield ETF, manager experience is crucial. At J.P. Morgan Asset Management, we have expertise across all major fixed income sectors, including high yield, with responsibility for over $1trillion in active fixed income assets globally.
Our high yield platform manages over $80 billion for clients around the world, backed by a team of 22 dedicated high yield credit research analysts, who are sector specialists and implement a bottom-up approach, focusing on a deep understanding of sector and company fundamentals.
Our credit research team also has a senior distressed analyst who is a former bankruptcy lawyer with over 25 years of legal experience.
Also essential to our high yield platform are our expert high yield portfolio managers, who have a proven track record of navigating the complexities of the high yield market and minimising default losses through different market cycles, and our dedicated high yield trading team, which enhances our ability to achieve best execution and source liquidity effectively.
Our scale provides significant advantages, such as a deep research team, restructuring expertise, advanced portfolio trading capabilities and strong capital markets relationships, enabling us to capitalise on market opportunities and identify undervalued and overvalued securities through proprietary research.
Gain the active edge with J.P. Morgan high yield bond ETFs
Investors can access the attractive total return potential of the high yield bond market with J.P. Morgan’s actively managed high yield bond ETFs, which target income and long-term capital appreciation from either US dollar or euro denominated high yield securities, with an emphasis on downside risk mitigation.