Global wealth firm JP Morgan has launched an actively managed exchange-traded fund (ETF) on the Australian Securities Exchange (ASX) aimed at providing investors with a source of consistent income.
Specifically, the JPMorgan Global Equity Premium Income Complex ETF (ASX: JEGA) is looking to generate a 7 per cent to 9 per cent annual return paid on a monthly basis.
The ETF will have the ability to invest in a universe of 2500 global equities with the objective of constructing a high-quality, low-beta portfolio that is diversified across different sectors and regions. To do this, the manager will hold overweight positions in more attractive stocks and underweight positions in less attractive stocks relative to the index and determined by the insights of over 90 research analysts.
Further, an additional strategic overlay will be applied to the investment approach whereby a combination of options relating to the S&P 500 and MSCI EAFE indices will be sold against the long-only positions of the ETF, with the premiums from these instruments to be used to produce income opportunities.
The selling of call options on a weekly basis will allow the manager to mitigate volatility spikes affecting equity markets.
“Investors continue to seek high levels of income, but they also want exposure to stock markets with less volatility. We have seen the rapid growth in our option overlay US equity strategies over the past couple of years and we are delighted to bring a global equity version to join our equity premium income suite of products,” JP Morgan Australia and New Zealand head of wholesale Mark Carlile said.
“Australian investors, who have long enjoyed dividend income from domestic equities, now have the opportunity to earn income from their international equity investments.”
The new offering is the latest addition to JP Morgan’s suite of ETFs, which includes its Equity Premium Income ETF (ASX: JEPI) and US 100Q Equity Premium Income Active ETF (ASX: JPEQ).
“Together with JEPI and JPEQ, the launch of JEGA adds another dimension to our already strong equity premium suite of strategies. For those who are seeking income or income with lower volatility or simply to diversify their equity exposure, these objectives may be met by adding any one of these strategies or a combination of all three to a portfolio,” JP Morgan Asset Management Australia and New Zealand chief executive Andrew Creber said.
