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JP Morgan Plans to Jump Into ETFs

By Lawrence Carrel

JP Morgan Chase (JPM) is jumping into the ETF business.

In two SEC filings dated March 10, JP Morgan filed for exemptive relief for its first ETFs ever. The filings ask for relief for both index-based and actively managed ETFs.

The passive funds appear to be two bond-index ETFs. One will track an index of investment grade municipal bonds with 1 to 12 years to maturity and the other will track investment grade corporate bonds with an issuance of at least $300 million.

For actively managed funds, the filing asked for exemptive relief for funds that could hold stocks, bonds, open-end funds, closed-end funds and unit investment trusts. The strategy for JP Morgan's first actively managed ETF would be to invest in about 300 large-cap stocks across many sectors. The actively managed fund would have a fundamental weighting. The fund would "overweight inexpensive stocks with improving fundamental characteristics and underweight expensive stocks with deteriorating fundamental characteristics."

Currently, the bank runs the JP Morgan Alerian MLP Index ETN (AMJ). This exchange-traded note isn't a true ETF, but rather an unsecured debt sold to investors. However, JP Morgan wasn't the fund's sponsor, Bear Stearns was. JP Morgan acquired the ETN when it bought Bear Stearns in 2008. The AMJ tracks the market of master limited partnerships. MLP are partnerships that sell shares like a public company. Typically they're involved in business of transporting oil and natural gas.

The filings were first reported on the news feed at ExchangeTradedFunds.com.

Disclosure: no positions