Alternative Beta - J.P. Morgan Asset Management
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Alternative Beta

Unlock access to hedge fund strategies

Diversify your portfolio with liquid, low-cost exposures to hedge fund strategies.

Learn more about alternative beta, an industry leading concept to capture market exposure systematically through a “rules-based” approach.
Alternatives can help diversify portfolios

Traditional alternatives have been good diversifiers because of their low sensitivity to stock and bond price changes and perform well when traditional asset classes don’t. However, most investors cant access these funds due to high fees and investment minimums.

Hedge fund strategies outperformed stocks in down markets and kept up in modestly rising markets

Source: Bloomberg, Hedge Fund Research, J.P. Morgan Asset Management; based on rolling 5-year returns (monthly windows) from 12/31/93 through 12/31/17. Hedge funds represented by the HFRI Fund of Funds (FoF) Composite Index. Equities represented by the MSCI World Index. ETFs have fees that reduce their performance; indexes do not. You cannot invest directly in an index. For illustrative purposes only. Past performance is not indicative of future results.

M&A Example: Burger King Stock Price

July 2010 –October 2010

Source: Bloomberg, October 2010. For illustrative purposes only. Past performance is not indicative of future results.

Capturing hedge fund strategies systematically

Similar to traditional investments, research has proven that a portion of returns in alternative investments can be captured systematically – a concept called “Alternative Beta.” Through advances in technology and data, J.P. Morgan can capture market exposure systematically through a “rules-based” approach at a lower cost with more liquidity.

Take for example, merger-arbitrage – a popular hedge fund strategy. Rules can be applied on every merger-acquisition deal announced which helps diversify risk and capture the aggregate return of all deals in the market. Similar approaches are also applied to capture:

  • Equity long/short strategies
  • Managed futures strategies
  • Additional event-driven strategies

J.P. Morgan Alternative Beta ETFs employ these rules to systematically select securities and build exposures to hedge fund strategies.

Implementing alternatives in your portfolio

Consider adding J.P. Morgan Alternative Beta ETFs to your portfolio to help diversify a traditional stock/bond portfolio, lower overall equity volatility, reduce interest rate risk or improve risk-adjusted returns.

ACCESS TO HEDGE FUND STRATEGIES WITH J.P. MORGAN ETFs

  JPHF  
Diversified Alternatives ETF

An all-in-one solution for diversification

Explore JPHF
  JPLS   
Long/Short ETF

A single hedge fund strategy to reduce equity risk

Explore JPLS
  JPED  
Event Driven ETF

Enhance return potential through a targeted exposure

Explore JPED
  JPMF  
Managed Futures Strategy ETF

Enhance return potential through a targeted exposure

Explore JPMF

Disclosures

1ETF.com Award winners are selected in a three-part process designed to leverage the insights and opinions of leaders throughout the ETF industry. The awards process began with an open nomination period running from Dec. 4, 2017, through Jan. 2, 2018 for 2017 award and from Dec. 5, 2016, through Jan. 4, 2017 for 2016 award. ETF.com received hundreds of nominations from participants in all corners of the ETF space. Following the open nominations process, the ETF.com Awards Nominating Committee—made up of senior leaders at ETF.com, Inside ETFs and FactSet—voted to select up to five finalists in each category. Votes were tallied on a majority basis. Winners from these finalists were selected by a majority vote of the ETF.com Awards Selection Committee, a group of independent ETF experts. Committee members recused themselves from voting in any category in which they or their firms appeared as finalists. Ties were decided where possible with head-to-head runoff votes. Voting was completed by Jan. 20, 2018 for 2017 award and Jan. 20, 2017 for 2016 award, but results were kept secret until their announcement at the ETF.com U.S. Awards Dinner on March 22, 2018 for 2017 award and March 30, 2017 for 2016 award. J.P. Morgan Asset Management and JPMDS are not affiliated with ETF.com.

The performance quoted is past performance and is not a guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end please call 1-844-4JPM-ETF.

Investing involves risk, including possible loss of principal. International investing involves a greater degree of risk and increased volatility. Changes in currency exchange rates and differences in accounting and taxation 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.

RISK SUMMARY FOR JPHF:

  • Investing involves risk, including possible loss of principal. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than their original cost. ETF Shares are bought and sold throughout the day on an 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. For all products, brokerage commissions will reduce returns.
  • 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.
  • 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.
  • 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 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.
  • There is no guarantee the Fund will meet its investment objective.
  • Diversification may not protect against market loss.

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.