JPMorgan AM launches active sustainable ETFs in Australia

JPMorgan Asset Management has expanded its exchange traded funds offering for Australian investors with the launch of two actively managed, sustainability-focused strategies.

The new Australia-domiciled JPMorgan Climate Change Solutions Active ETF and JPMorgan Sustainable Infrastructure Active ETF were listed on the Australian Securities Exchange.

The two managed funds, which are both benchmarked against the MSCI All Country World Index (Total Return Net) – AUD, leverage the firm’s active insights and portfolio management teams, “as well as a dedicated sustainable investing team in conjunction with the firm’s proprietary artificial intelligence technology”, JPMAM said.

JPMAM launched its first active ETFs in Australia last month when it listed the JPMorgan Global Research Enhanced Index Equity Active ETF and JPMorgan Equity Premium Income Active ETF on the ASX.

The US group follows in the footsteps of other major global asset managers that entered the Australian market much earlier with new actively managed ETFs.

In October this year, UK-based asset manager Abrdn launched an actively managed, sustainability-themed ETF in Australia, which is also its first ETF in any Asia-Pacific market.

Fidelity International launched its first active ETF in late October 2018 and rolled out a second product in December 2021. Earlier this year, Janus Henderson listed its net-zero-themed ETF in Australia, bringing its total active ETFs in the market to three.

Mark Carlile, head of wholesale for Australia and New Zealand at JPMAM, said the two new ETFs “take an active approach to finding companies that are developing solutions that focus on both climate change and sustainability”.

The Climate Change Solutions ETF invests in companies that the firm expects to be “poised to benefit from growing demand for climate change solutions”.

Its portfolio will include companies that are producing less carbon-intensive energy such as wind or solar power, improving the electricity grid and investing in less carbon-intensive forms of agriculture, construction or transportation, or those developing technologies to reduce waste.

The Sustainable Infrastructure ETF invests in assets such as electricity networks, water networks and water treatments, wind, hydropower and solar, healthcare facilities and care homes, affordable housing and student accommodation, data storage and telecommunications tower operations, sustainable railway network, sustainable warehousing, and sustainable transportation systems.

The two ETFs will use ThemeBot, JPMAM’s proprietary natural language processing tool, to review nearly 13,000 stocks globally and rapidly analyse tens of millions of data sources.

Tomomi Shimada, lead sustainable investing strategist for Asia Pacific on JPMAM’s sustainable investing team, said: “Once we identify the sub-themes that facilitate the business activities to build a more sustainable future, ThemeBot seeks to identify companies globally that are developing tangible sustainable solutions under the sub-themes, to create a universe of potential investments.

“This is then overlaid by our team of global research analysts who assess the fundamental investment case for each of the stocks and support the portfolio management team to construct differentiated and high-conviction portfolios.”

Shimada added that the portfolio managers have the discretion to invest in companies outside of those identified by ThemeBot.

The two ETFs charge annual management fees of 0.55 per cent.

Australia’s ETF industry assets ballooned by a record 44 per cent in 2021 to A$136.9bn (US$92bn), after inflows rose 28 per cent year on year to A$25.9bn.

Assets shrank 9 per cent during the first half to A$124.3bn, however, but the industry still attracted A$6.2bn in net new money.

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