ETF TV News #82 Bryon Lake of J.P. Morgan Asset Management discusses new ActiveBuilder ETFs as global ETFs assets reach US$9.35 trillion

[00:00:03] Presented by Syntax Advisers.

Deborah Fuhr [00:00:08] Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investment. I’m Deborah for joining me today is Bryon Lake, managing director and head of Americas ETF client at JP Morgan Asset Management. Welcome, Bryon.

Bryon Lake [00:00:21] Thanks, Debbie, nice to see you.

Deborah Fuhr [00:00:23] So can you tell us about the two new ETFs that you listed last week, please?

Bryon Lake [00:00:27] Investors are looking for new tools to build the portfolio of the future. And so we launched to active builder ETFs last week, JUSA and JIDA, giving exposure to US equities and international equities. They join an emerging market version that we launched earlier in March to fill out a core suite of active builder ETFs.

Deborah Fuhr [00:00:53] That’s great. And what type of investors do you expect to use these ETFs and how do you envision they’ll be using them?

Bryon Lake [00:01:01] Asset allocators, right? So, investors that are looking to build a portfolio using a bunch of different ETFs that help them to achieve exposure to the overall markets. When they look at the capital markets assumptions going forward for the next couple of years, they’re concerned that they may need some ETFs that can help them deliver some potentially outperformance. And so investors that are looking to build the core of their portfolio, but also give themselves the opportunity to outperform. So the active builder suite has about a 0.99 beta to the market while also targeting an outperformance of 1.25-1.5% over the long term.

Deborah Fuhr [00:01:39] Can you talk a little bit about what you see as some of the trends in Latin America these days?

Bryon Lake [00:01:43] We’re excited about Latin America. We’ve just made a key hire down there. We continue to deliver our global platform there. Both are UCITS and US ETFs. It’s been a really good market for us where investors are looking to get exposure to core parts of the market using ETFs.

Deborah Fuhr [00:01:58] Yeah, I think we’re definitely seeing that they’re embracing both UCITS and US domiciled ETFs, so a big change from a few years ago. What are your plans for the rest of 2021?

Bryon Lake [00:02:07] So with the active builders suite launch that now gives us five active equity ETFs and eight active fixed income. If you look at the stats from last year, even though active ETFs only made up about 3% of total assets, they made up about 12% of the flows into ETFs. And so this active builder suite gives us a set of capabilities investors can use to help navigate what are increasingly challenging markets and potentially markets that might not offer the returns that the last couple of years have. And so we’re really excited about our positioning, particularly with our active suite of capabilities.

Deborah Fuhr [00:02:42] So the first half of 2021 has been really strong in terms of asset growth, in terms of net flows. What are your thoughts for the rest of 2021?

Bryon Lake [00:02:50] As you know, over the last 12 months ETFs have seen about a trillion dollars come into them. Looks like we’re on pace for that again over the course of calendar year 2021. We definitely think that that’s going to continue and we think active is going to play a big role in that. Investors looking for things that can help differentiate their portfolios from some of the other tools that they’ve been using we think will make a big difference. The active builders is a great example of that. So we have 370 investment professionals around the world that look after our collective 700 billion dollars. And to harness all of that strength and deliver it at a very attractive price point is the type of thing that we think will be emerging as investors are looking to adapt their portfolios through 2021.

Deborah Fuhr [00:03:31] Thank you, Bryon. That was a very interesting update.

Bryon Lake [00:03:34] It’s been a pleasure, thank you.

Deborah Fuhr [00:03:36] In other news, last week there were 37 new listings from 24 issuers. That’s a pretty strong week. I think when we look at what was significant, CIBC in Canada listed six sustainable ETFs on the new exchange. There were twelve exchanges that had listings. The largest number, China had 11, Canada had nine, and there were 12 new cross listings.

[00:03:59] When we look at the types of products that came to market, one was crypto, one was commodity, three were mixed. We had 23 that were equity and nine were fixed income. Again, continuing on the themes of ESG and thematics where the primary focus of products that have come to market.

[00:04:17] I think the interesting thing is we’ve now gotten our end of June data, or the end of the first year data clean. And what we can see is there’s now 8977 products that are listed around the world. There’s 18299 listings. The assets have now reached a record of 9.35 trillion dollars. That’s pretty amazing to see how much it’s grown over the past year. We have 556 providers of products. They’re listed on 77 exchanges in 62 countries.

[00:04:48] The ETF industry globally has seen 25 months of consecutive net inflows. And if we look at the assets, what we can see is the assets in the US have grown significantly to 6.5 trillion. When we look at the year to date flows, we were at 472 billion of net inflows, which is just 18 billion shy of what we saw as net inflows for all of last year. When we look at Europe, we’re at 112 billion of net inflows. We are only seven billion shy of where we were all of last year, so we’re seeing very significant net inflows.

[00:05:28] The European market is now at a record 1.48 trillion. And if we look at global flows, we’re at 656 billion net inflows compared to 763 for all of last year. So we’re off by just 104 billion. This will be a year where I think we’ll see over a trillion dollars flow in in calendar year. If we were to look on a 12 month basis, we’ve already seen a trillion dollars flowing in over the past year.

[00:05:56] The majority of money is sitting in equities and we do see that the majority of the net inflows have been going into equities. We’ve seen 456 billion of net inflows year to date into equities, which is 91 billion more than all of last year. Fixed income is 111 billion. In commodities, year to date, have seen outflows of five billion. As you heard from Bryon, active has been very popular with 82 billion of net inflows, which is above last year at this point of 26 billion.

[00:06:27] Thank you to our sponsor, Syntax Advisors, to Bryon for joining us, and for you watching. To watch prior episodes, please go to ETFTV.NET.

[00:06:45] ETF TV News does not provide investment advice nor recommend products.

Published on July 13, 2021