JPMorgan Chase & Co (JPM) plans to jump into the burgeoning exchange-traded fund (ETF) business, according to two Securities and Exchange Commission filings.

The filings, made on Wednesday, sought approval for both index-based and actively managed ETFs. One index-based fund will track an index of investment-grade U.S. municipal bonds with maturities between one and 12 years, while the other will track investment-grade U.S. corporate debt with an issuance of at least $300 million.

For actively managed funds, the filing sought approval for funds that could hold stocks, bonds, open-end funds, closed-end funds and unit investment trusts. The strategy for JPMorgan’s first actively managed ETF would be to invest in about 300 U.S. large-cap stocks across many sectors.

“The process overweights inexpensive stocks with improving fundamental characteristics and underweights expensive stocks that have deteriorating fundamental characteristics,” the filing said.

Lawrence Carrel, author of “ETFs for the Long Run,” said the bank already runs the JPMorgan Alerian MLP Index ETN (AMJ), but “this exchange-traded note isn’t a true ETF.” He said it is an unsecured debt sold to investors.

Carrel noted that JPMorgan is not the fund’s sponsor — Bear Stearns is. “JPMorgan acquired the ETN when it bought Bear Stearns in 2008,” he said. The AMJ tracks the market of master limited partnerships. MLP are partnerships that sell shares like a public company.

ETFs globally breached the $1 trillion level for the first time in 2009. Assets in ETFs rose 46 percent during the year to $777 billion.

Source: Reuters

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