Latest news with #JonMaier
CNBC
04-05-2025
- Business
- CNBC
After decades of index fund dominance, investors are getting more active in trading the market
Something unusual is happening in a market long dominated by index funds. Active management is staging a comeback. Take the action in equity ETFs two weeks ago. Amid more whipsaw action in stocks that has typified 2025 trading, there was a net outflow from equity exchange-traded funds. But in a surprise, the selling was mostly on the index fund side. There were net outflows of $1 billion from equity ETFs in all, but $3 billion in inflows to active equity ETFs to offset the $4 billion index fund withdrawals, according to ETF Action data. ETF experts say actively managed ETFs time in the spotlight marks a transformation that may reshape the ETF space for years to come. A record number of ETFs has launched this year, with 288 new funds and the potential for over 1,000 new ETFs by year-end. In total, there are now more than 2,000 active ETFs, rivaling the total number of index ETFs. While they only make up about 10% of total ETF market assets, they are now over one-third of the flows this year from investors. Through the trading week ended April 25, ETFs had taken in $363 billion in flows in 2025, with $132 billion (34%) into actively run funds. "Actively managed ETFs are taking over the marketplace," said Jon Maier, JPMorgan Asset Management Chief ETF Strategist, appearing on last week's "ETF Edge." JPMorgan offers a range of actively managed ETFs, including its popular income ETF JEPI. There are good reasons for all investors, whether index or active, to use ETFs. Buying and sell stocks offers tax efficiency, and many ETFs have relatively low expense ratios. More active ETFs are on the way, with a decision from the SEC expected that would allow companies that currently have traditional mutual funds to offer a version of all of those funds as an ETF. "There is parity between active and passive now even if the asset bases are very much different," Maier said, referring to the fact that index funds continue to hold the larger share of total assets ($231 billion in this year's flows). After decades during which active stock pickers have often been exposed as "closet indexers" in their funds, in effect buying up what the index holds more than distinguishing their portfolios from benchmarks, it is important for investors to identify funds that are taking a unique approach. Mike Akins, founding partner of ETF Action, said investors can look at a measure of correlation to the overall market — R-squared — as one way to get a sense for a fund's "active" nature. Some ETF managers are running what are "active by default" funds with a tilt, a quantitative model unique to their firm which enhances the underlying index performance, but remain closer to the index in overall composition, such as Dimensional Fund Advisors and Advantis ETFs. On the other hand, firms like JPMorgan and T. Rowe Price, from the world of active stock picking, are doing more "bottoms up" analysis of stocks and there R2 is "a little lower" as a result, Akins said. As more money shifts to active, it's critical for investors to not overreact to short-term swings in the market. Investors may have moved a lot of money earlier in April when the markets fell apart, but as of the end of this week's trading, stocks had come full circle in a trip that had seen them down as much as 13% in April. With Friday's surge capping the longest winning streak for the S&P 500 in two decades, the market had recovered all of its losses since April 2, measured by returns in both the S&P and Nasdaq. "Don't trade around when the market panics," said Bob Pisani, CNBC Senior Markets Correspondent and "ETF Edge" host. "Don't do panic trading. It's an old story, for 40 years been saying it, but it really bears repeating. Don't do anything stupid when the market is crazy." Or, in the words of Vanguard Group founder John Bogle, the index fund pioneer: "Don't do something … stand there." However investors gain market access, history says the most important trading strategy is to remain invested, and recent weeks make that point, with 5-7% down days followed by a 10% up day. "If you missed that day, got scared and sold on the 5% down day, it really impacts returns in a long term portfolio," Maier said. "Time in the market, not timing the market. Sometimes it is hard and painful, but for investors that have the wherewithal, over the long term you probably will benefit," he added. There will continue to be reasons for shifts in flows away from blanket index fund exposure as macro trends lead the institutional side of the investor base to use more active ETFs. Funds like JEPI, which provide income and downside protection, or buffer ETFs that limit the impact of stock volatility on returns while capping upside, are primarily popular with registered investment advisor firms that are buying on behalf of many clients for whom they manage investments. "RIAs are allocating clients to it," Akins said. "Everyone has agreed for a while that we have had historically high valuations, and the market needed a reset, so people took a little risk off anyway," he added. Some of that shift has occurred due to the volatility in the bond market which investors have long relied on for income, but where action in Treasury yields has made advisors and investors anxious about investing in anything but ultra-short term bonds (roughly 60% of all bond ETF flows this year). "They found a different way to allocate fixed income money to similar beta, or up and downs in the market, and capture that side of the market but in a way that can meet income needs and gain some return from the overall equities market," Akins said. The rise of the younger retail investor is also an important part of the active phenomenon. Robinhood CFO Jason Warnick said on its earnings call last week that the brokerage app saw "incredibly strong engagement across the board," through the first quarter and in April. "When the market is down, our customers tend to be net buying on the day. A few years ago, folks were worried about what will happen to the retail trader if the market softens? This quarter and the strength of April really helps to answer some of those questions." Akins says the younger generation of "YOLO" investors are really leaning into leverage and inverse ETF strategies. With $10 billion in inflows year to date, leveraged and inverse ETFs investing in a single stock like Tesla or Nvidia typify this trend. "All the evidence says this is not institutional money. Less than 5% of these ETFs are held by institutions based on 13F filings. It is being driven by retail," Akins said. "On the leverage ETF side, there are just more and more people embracing the stock market and more 'Robinhood' traders are willing to do some crazy stuff." Maier says there will be more of a gradual move into active ETFs in more traditional asset classes, such as large-cap value and growth, and international, as the ETF structure becomes that much more accepted. Akins expects any split in the market's to still lean heavy on index funds within traditional investing, with passive funds taking 80%-90% of assets overall. But the shifts of the past few years, from the risk-on single-stock funds to the new income and downside protection strategies, will grow. "We will continue to see the spicy side of the market grow more and more, leverage and inverse. Every weekend, when I sit down to review new launches, I just shake my head on the single stock side. But we will see more innovation on synthetic income and buffered strategies … a continuation of the big themes we've been seeing," he said. Disclaimer
CNBC
02-05-2025
- Business
- CNBC
Two JPMorgan ETFs that are providing a destination for risk-averse investors
The money manager behind two of the world's biggest actively managed exchange-traded funds sees a way for investors to stay defensive without leaving the market. Jon Maier's firm is behind the JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Ultra-Short Income ETF (JPST). They're listed as No. 1 and No. 3 in size globally in their category, according to VettaFi. The goal: give investors downside protection while generating income. "When the VIX [volatility] increases, that offers the opportunity for an increased amount of income to the investor of JEPI," the J.P. Morgan Asset Management chief ETF strategist told CNBC's "ETF Edge" this week. "Conversely ... when the volatility declines, given that the options are written out of the money, it provides some upside in the underlying portfolio." JEPI fell around 3% in April while volatility gripped the market. As of Thursday's market close, the ETF is off about 4% for the year while the S&P 500 is down almost 5%. JEPI's top holdings include Mastercard, Visa and Progressive according to JPMorgan's website as of April 30. Meanwhile, the JPMorgan Ultra-Short Income Fund focuses on fixed income instead of U.S. equity. The fund is virtually flat so far this year. "It provides a ballast in your portfolio [and] stability for those investors that are looking to protect principle," Maier said. ETF Action's Mike Akins notes these ETFs are satisfying an important investment need in the market. "This category is where people are hiding out to weather the storm," the firm's founding partner said on the show. According to J.P. Morgan Asset Management, the JPMorgan Ultra-Short Income Fund had the second-highest volume among active U.S. fixed income ETFs between April 3 and 10 — which marked the year's most volatile weekly span on Wall Street.
CNBC
02-05-2025
- Business
- CNBC
Two JPMorgan ETFs that are providing a destination for risk-adverse investors
The money manager behind two of the world's biggest actively managed exchange-traded funds sees a way for investors to stay defensive without leaving the market. Jon Maier helps run the JPMorgan Equity Premium Income ETF (JEPI) and JPMorgan Ultra-Short Income ETF (JPST). They're listed as No. 1 and No. 3 in size globally in their category, according to VettaFi. The goal: give investors downside protection while generating income. "When the VIX [volatility] increases, that offers the opportunity for an increased amount of income to the investor of JEPI," the J.P. Morgan Asset Management chief ETF strategist told CNBC's "ETF Edge" this week. "Conversely ... when the volatility declines, given that the options are written out of the money, it provides some upside in the underlying portfolio." JEPI fell around 3% in April while volatility gripped the market. As of Thursday's market close, the ETF is off about 4% for the year while the S&P 500 is down almost 5%. JEPI's top holdings include Mastercard, Visa and Progressive according to JPMorgan's website as of April 30. Meanwhile, the JPMorgan Ultra-Short Income Fund focuses on fixed income instead of U.S. equity. The fund is virtually flat so far this year. "It provides a ballast in your portfolio [and] stability for those investors that are looking to protect principle," Maier said. ETF Action's Mike Akins notes these ETFs are satisfying an important investment need in the market. "This category is where people are hiding out to weather the storm," the firm's founding partner said on the show. According to J.P. Morgan Asset Management, the JPMorgan Ultra-Short Income Fund had the second-highest volume among active U.S. fixed income ETFs between April 3 and 10 — which marked the year's most volatile weekly span on Wall Street.
CNBC
29-04-2025
- Business
- CNBC
World's largest actively managed ETF manager on the strategy behind the fund
Active ETFs are responsible for about a third of ETF flows this year. Jon Maier oversees the world's largest actively managed ETF, Premium ETF or JEPI. The JPMorgan Asset Management Chief ETF Strategist lays out the strategy behind the fund and how it's been able to capture investors with Bob Pisani on 'ETF Edge'. Mike Akins of ETF Action also joins the conversation.
CNBC
29-04-2025
- Business
- CNBC
ETF Edge: Top trends in active ETFs and why investors are rushing into them
More than 1000 ETFs are set to launch in 2025. Jon Maier, JPMorgan Asset Management Chief ETF Strategist, and Mike Akins of ETF Action sit down with CNBC's Bob Pisani on 'ETF Edge' to discuss the types of ETFs leading the launches, the rush into active ETFs, the world's largest actively managed ETF, big country ETFs and more.
