The first exchange-traded fund (ETF) was established in 1990. But these passively managed products (which typically replicate stock market indexes) have low fees, liquidity in stocks, and the ability to buy and sell in real time, unlike traditional stocks. Funds with an end-of-day net asset value did not begin to become commercially popular until the first decade of the 21st century. And when that happened, the growth was remarkable. Currently, these vehicles manage his $12 trillion worth of savings, and by 2027, assets under management are predicted to reach his $20 trillion.
JPMorgan Asset Management wants to play a larger role in this growing business. The American banker started selling ETFs relatively late, launching its platform in 2014, and currently holds 113 ETFs with assets of $164 billion. “Our goal is for this number to reach $1 trillion within five years,” JPMorgan Asset Management CEO George Gatti said at the EL conference in London last week. PAÍS also made the presentation at the annual media event to which they were invited.
The main way JPMorgan Asset Management is growing in this market is, among other things, through so-called actively managed ETFs. Although these products have the same liquidity and price characteristics as regular ETFs, they do not simply replicate the movements of stock indexes. Instead, the manager has the leeway to change the portfolio and, if successful, achieve further profitability. “Our approach to risk is to help clients navigate turbulent times. And we do that with a focus on active management. Uncertainty creates inefficiencies in many markets. That means opportunities for good managers,” Gatti explained. “Although actively managed ETFs currently represent only 6% of the exchange-traded fund market, they represent a revolution in the industry in terms of cost, transparency, efficiency, and flexibility.”
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Mr. Gatti also emphasized the technology efforts in this area. “This is the biggest challenge facing the industry. We already have 150 engineers. This will allow us to reduce costs and provide greater added value to our customers.” said. Alongside ETFs, another major growth area for the American asset manager is alternative products. “Unlisted assets provide portfolio diversification for our clients,” Gatch said.
Karen Ward, chief market strategist for Europe, the Middle East and Africa at JPMorgan Asset Management, also attended the event and sent a message of optimism about the global situation. “The economy is doing better than business owners thought two years ago,” she stressed. In her opinion, inflation, although moderate, will be a key variable in determining market trends in the coming months. “Real wages are rising for the first time in a while. That’s good news for consumers. Moreover, fiscal policy needs to work in favor of economic growth. We are working on effective public spending.”
Regarding monetary policy, Ward believes Western central banks will start lowering interest rates next summer. “But it will remain higher than before COVID-19. If you think about it, that means the global economy has enough strength to grow far from zero interest rates, so That would be a good sign.”
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