Industry Updates

JP Morgan AM to merge global emerging market index fund with ESG ETF

Merger set to take place on 20 May

Theo Andrew

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JP Morgan Asset Management (JPMAM) plans to merge its global emerging market research enhanced index fund with an actively managed ESG ETF following a similar strategy.

Effective 20 May, the US giant said the $47m Global Emerging Markets Research Enhanced Index Equity fund will be merged with the $686m JP Morgan Global Emerging Markets Research Enhanced Index Equity ESG UCITS ETF (JREM).

JREM, which is an active ETF aiming to outperform the MSCI Emerging Market index, is labelled Article 8 under the Sustainable Finance Disclosure Regulation (SFDR).

Investors merging into the ETF will see their ongoing charges decrease from 0.40% to 0.30%.

A JPMAM spokesperson said: “The merger, intended to be in the interests of shareholders in both funds, presents an opportunity to merge into a larger ETF with lower total expenses, offering stronger prospects for growth. Investors will also have the opportunity to trade shares intra-day on the secondary market.”

According to its latest available factsheet, the actively managed ETF has an overweight position in Russian securities, 3.6% versus 3.3% of the MSCI benchmark, at the end of January.

However, JREM’s holding in Russia is likely to go to 0% following MSCI’s decision to remove ‘uninvestable’ Russian securities from its emerging market indices.

China currently accounts for almost a third of the ETF with a weighting of 32.9%, followed by Taiwan (15.5%), South Korea (12.7%), India (11.5%) and Brazil (4.5%).

The firm added investors will have until the 10 May to decide how they wish to proceed.

JPMAM has added ESG filters to several bond ETFs so far this year, including three ultra-short income bond ETFs as well as three corporate bond ETFs.

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