Finance heavyweight J.P. Morgan is jumping headlong into the exchange-traded fund (ETF) space, to the tune of nearly $10 billion. The firm is due to commence its conversion of four of its mutual funds to ETFs in April. Its Inflation Managed Bond Fund, Market Expansion Enhanced Index Fund, Realty Income Fund, and International Research Enhanced Equity Fund are officially moving to a more tax-efficient, lower-cost investment model.
This is by no means the "tipping point" for ETF conversions that some industry experts heralded it as. Bryon Lake, Global Head of J.P. Morgan Asset Management, said, “We know that investors use mutual funds across their entire book of business. We’re very successful in that space. We know that investors are starting to incorporate more ETFs into their portfolios. But they’re also using mutual funds and those get the job done as well.” Currently managing around $800 billion in its mutual fund franchise, J.P. Morgan is now being proactive about augmenting its offerings with alternative funds and ETFs.
Conversions are just one growth-driving component of the global ETF industry, which saw more than $800 billion in inflows last year. Steadily climbing from less than $3 trillion in pre-pandemic times, cumulative U.S. ETF assets under management reached over $7 trillion by the end of 2021. Dave Nadig, Director of Research and Chief Investment Officer at ETF Trends, expects to "see every major active and passive asset manager in the ETF space," with some of them converting "mutual funds where it makes sense.