Bryon Lake, managing director and head of international ETFs at JP Morgan Asset Management, has said he will be utilising the firm's scale in the active space to access markets and launch ETF products across all asset classes in the European market.
Lake, who joined JPMAM from Invesco Powershares in March 2017, said the firm is in a position to launch a vast range of different products, from plain vanilla passives to smart-beta and active ETFs, thanks to JPMAM's presence in the investment arena - it currently runs $1.7trn globally as at 31 December 2017.
"I am in a great spot as I can utilise JPMAM's capabilities and see which ones make sense to deliver through the ETF wrapper," Lake said.
Last November, JPMAM launched its first products into the European ETF market with two alternative beta products and subsequently unveiled three fixed income ETFs that listed on the London Stock Exchange on 22 February.
"One must remember the ETF wrapper is just a piece of technology," Lake added.
"Previously, some of our competitors [just] put plain vanilla indices into the ETF wrapper, but you can put a whole range of investment strategies into an ETF and we are seeing more of that now, which helps investors achieve different outcomes.
"Whether that is a plain vanilla, a smart-beta capability or an active capability, it is possible through the ETF wrapper. [At JPMAM] we have the advantage of looking at it with a blank sheet of paper."
Fixed income ETFs
In addition, Lake predicted that although fixed income ETFs currently only account for 25% of the ETF market, this proportion could grow to as much as 70% in the medium term.
The advantages of an ETF wrapper, he said, are that they give investors the ability to have real-time price discovery for a basket of bonds as they trade on the exchange intraday.
"This is what investors should be demanding these days," he continued.
"Fixed income is the area that will continue to develop. As it plays out over the next five or ten years, [fixed income] will become the majority of ETF assets. This is what you see if you look at the mutual fund industry as well."
Meanwhile, the international ETFs head said the big advantage to launching ETFs in Europe compared to the US is the UCITS structure.
Having ETFs in a UCITS wrapper, Lake said, enabled the firm's products to be distributed not only across Europe but investors in Asia and Latin America are also comfortable with using it.
"UCITS structures as a whole are relatively straightforward and extremely well done for investors, so using that regulatory framework and then taking our capabilities to Europe and regions beyond is a massive benefit," he said.
On MiFID II, which came into effect on 3 January, Lake said it would benefit firms distributing ETFs as they are already aligned with what the piece of regulation is pushing towards, chiefly increased transparency.
"MiFID II is a positive for the ETF space and will continue to reinforce the growth around ETFs," he added.
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