JPMorgan Diversified Alternatives ETF
Diversification at the core.
Through a bottom-up, rules-based approach, JPMorgan Diversified Alternatives ETF aims to provide direct, diversified exposure to hedge fund strategies.
- Led by Dr. Yazann Romahi, a pioneer in hedge fund beta investing since 2009.
- An institutional-quality solution providing direct, diversified exposure to hedge fund strategies in a cost-efficient ETF.
- Employs a rules-based approach to systematically select securities and build exposures to hedge fund strategies.
- Seeks to increase diversification and reduce overall portfolio volatility which may lead to higher portfolio risk-adjusted returns.
HEDGE FUND STRATEGIES IN UP AND DOWN MARKETS (7/02 – 9/17)
Chart source: Bloomberg Barclays, FactSet, HFRI, Standard & Poor’s, J.P. Morgan Asset Management. Upside/downside capture measures the performance of the HFRI Fund Weighted Composite Index relative to the S&P 500 and Bloomberg Barclays US Aggregate Bond Indices in up/down markets, respectively. Hedge fund returns in different market environments are based on monthly returns over the past 15 years. Guide to the Markets, U.S. — data as of 9/30/17. Shown for illustrative purposes only. Past performance is not indicative of future results.
Fees and Minimums
Total return assumes reinvestment of income.
The Fund's adviser and/or its affiliates have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses, dividend and interest expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation and extraordinary expenses) exceed 0.85% of the average daily net assets. The Fund may invest in one or more money market funds advised by the adviser or its affiliates (affiliated money market funds). The Fund's adviser has contractually agreed to waive fees and/or reimburse expenses in an amount sufficient to offset the fees and expenses of the affiliated money market funds incurred by the Fund because of the Fund's investment in such money market funds. This waiver is in effect through 2/29/2020, at which time the adviser and/or its affiliates will determine whether to renew or revise it. The difference between net and gross fees includes all applicable fee waivers and expense reimbursements.
ETFs have fees that reduce their performance: indexes do not. You cannot invest directly in an index.
The BofA Merrill Lynch US 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. The index is rebalanced monthly and the issue selected is the outstanding Treasury Bill that matures closest to, but not beyond 3 months from the rebalancing date.
The prices of equity securities are sensitive to a wide range of factors, from economic to company-specific news, and can fluctuate rapidly and unpredictably, causing an investment to decrease in value.
The Securities and Exchange Commission (SEC) and financial industry regulatory authorities in other countries may impose prohibitions, restrictions or other regulatory requirements on short sales, which could inhibit the ability of the adviser to enter into short sale transactions on behalf of the Fund.
Investments in smaller companies may be riskier, more volatile and more vulnerable to economic, market and industry changes.
There is no guarantee that the use of long and short positions will succeed in limiting an investment's exposure to domestic stock market movements, capitalization, sector-swings or other risk factors. Investments in a portfolio involved in long and short selling may have higher portfolio turnover rates. This will likely result in additional tax consequences. Short selling involves certain risks, including additional costs associated with covering short positions and a possibility of unlimited loss on certain short sale positions.
Index returns and sector returns are for illustrative purposes only and do not represent actual Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged.
The Fund's investments in bonds and other debt securities will change in value based on changes in interest rates. If rates rise, the value of these investments generally drops. The Fund may also invest in securities including junk bonds, loans and instruments that are issued by companies that are highly leveraged, less creditworthy or financially distressed. These investments are considered to be speculative and are subject to greater risk of loss, greater sensitivity to interest rate and economic changes, valuation difficulties and potential illiquidity. Loans are subject to additional risks including subordination to other creditors, no collateral or limited rights in collateral, lack of a regular trading market, extended settlement periods, liquidity risks, and lack of publicly available information.
International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation policies outside the U.S. can raise or lower returns. Also, some overseas markets may not be as politically and economically stable as the United States and other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and decreased trading volume.
Investments that are concentrated in a single country or region are subject to the additional risk associated with a smaller number of issuers.
Investing in alternative assets involves higher risks than traditional investments and is suitable only for sophisticated investors. Alternative investments involve greater risks than traditional investments and should not be deemed a complete investment program. They are not tax efficient and an investor should consult with his/her tax advisor prior to investing. Alternative investments have higher fees than traditional investments and they may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain. The value of the investment may fall as well as rise and investors may get back less than they invested.
Alternative investment strategies use a variety of complicated investment techniques and involve complex securities transactions that include risks in addition to those risks with direct investments in securities described in the prospectus.
The Fund may invest in futures contracts, options, swaps, forwards and other derivatives. Many derivatives create leverage thereby causing the Fund to be more volatile than it would be if it had not used derivatives. Derivatives may be more sensitive to changes in economic and market conditions and could result in losses that significantly exceed the Fund's original investment.
The Fund may use derivatives in connection with its investment strategies. Derivatives may be riskier than other types of investments because they may be more sensitive to changes in economic or market conditions than other types of investments and could result in losses that significantly exceed the Fund's original investment. Many derivatives will give rise to a form of leverage. Derivatives are also subject to the risk that changes in the value of a derivative may not correlate perfectly with the underlying asset, rate or index. The use of derivatives may not be successful, resulting in losses to the Fund, and the cost of such strategies may reduce the Fund's returns. Derivatives also expose the Fund to the credit risk of the derivative counterparty. In addition, the Fund may use derivatives for non-hedging purposes, which increases the Fund's potential for loss.
The Fund could experience a loss and its liquidity may be negatively impacted when selling securities to meet redemption requests by shareholders. The risk of loss increases if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices. Similarly, large purchases of Fund shares may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would.
There is no guarantee the funds will meet their investment objective.
The Fund will likely engage in active and frequent trading leading to increased portfolio turnover, higher transaction costs, and the possibility of increased capital gains.
Shares are bought and sold throughout the day on exchange at market price (not NAV) through a brokerage account, and are not individually redeemed from the fund. Shares may only be redeemed directly from a fund by Authorized Participants, in very large creation/redemption units. Brokerage commissions will reduce returns.
Total return assumes reinvestment of income.
Estimated beta: estimate of beta to MSCI World Index, calculated based on portfolio holdings on report date
Ex-ante volatility: estimate of portfolio volatility (annualized standard deviation), calculated based on portfolio holdings on report date
Maximum drawdown: largest peak to trough decline during a specific record period of an investment or fund, quoted as the percentage between the peak to the trough (to be calculated using daily data)