Active Fixed Income ETFs Surge as Investors Shift from Passive 

Travis Spence joins me now down here on the trading floor of the big board.

He is the global head of ETFs at JPMorgan Asset Management, not just a great guest, but a great guest who just rang the closing bell.

Thanks for joining us.

Pleasure to be here, JD.

So bond ETFs alone, they've pulled in more than $163 billion this year.

What do you think is really driving that rush into bonds, the fixed income side of things?

Yes, well, look, I think fixed income is here to stay.

You've got Yields that are still high, you've got a really positive environment for corporate fundamentals.

We think that's an environment that bonds do well in.

But I think in terms of the ETF volume, I think what's driving a lot of the ETF volume, 40% now this year, is active fixed income ETFs.

And when you think about the overall market, take mutual funds as an example.

Most of that is actively managed.

The ETF industry has been almost imbalanced.

Because we see most of the exposure in passive now we're seeing that shift and the active fixed income ETFs are really starting to drive the flows.

So as you and I are talking, we call these the cubes affectionately down here on the floor.

We see a bunch of these offers and let's go through a few of them.

For instance, JCPB, kind of your base level bond exposure, JPIE, more flexible, lower all.

If you're interested in some global offerings, JBND, how should investors think about allocating?

Across the spectrum with some names like these, look, we've we've launched now 16 active fixed income ETFs.

So really think about it as across the entire range of fixed income exposures, and some of those are from core into the extended sectors.

We also have Ultra Short that we launched back in 2017, now the largest active fixed income ETF in the world, uh, which is JPST.

So you really can cover the entire range, and I, and I think what's what's really.

Interesting is that now you're starting to see a lot of investors take notice and they're starting to take advantage of having the ETF wrapper with active management.

I think what makes us a little bit unique, JD, is that we've been running fixed income strategies for decades.

In fact, today we're celebrating here also crossing over $1 trillion in fixed income, our broad fixed income platform, and we've got now $100 billion that sits in active fixed income ETFs.

So that's been driving like a lot of the volume that we're seeing, um, but what makes us unique is that we've been running these strategies for decades.

We've taken the best of our active strategies and put them into the ETF wrapper.

And I think for fixed income, when you think about transparency, the accessibility, the way that spreads trade, and and the the level of liquidity that you have in in active fixed income ETFs, they're a preference for many investors.

And so again, we're really Excited that we have this broad platform that investors can access across their fixed income portfolios.

And overall, are you seeing more interest on the active side than the passive side for fixed income ETFs?

And if so, what does that tell you about not just where people are, pardon me, but where they still want to go?

Yes, no, 100%.

I mean, I think, I think you know where the markets are now, a lot of investors are overindexed, and you don't want to be there on fixed income, especially.

You want to be active both for duration as well as credit.

And we've got strategies that have been outperforming passive and the broad indices for a long, long time, and that's that's where it becomes exciting to access these in the ETF wrapper now.

What would you say is the strategy from here moving forward for active fixed income ETFs part of the general JPM ecosystem?

Well, I think you're seeing investors like go back to that.

You're seeing.

Investors now have an ability to go into strategies that have been proven for the last few years in active fixed income ETFs.

So I think that's going to increase momentum.

It's going to increase focus on that.

And if you just think forward a few years to, you know, most of the ETF exposures being represented in active like in the mutual fund industry, you can see an industry.

That now has doubled over the last couple of years to about $550 billion in the US, probably grow to over $2 trillion over the next five years.

So that's an exciting thing for investors, an exciting area for us to be playing in as well.

Travis, congratulations.

It's an exciting suite of products for the right investors out there, and obviously it's been very popular and successful.

Thanks a lot for joining us.

It's nice to have you on the show today.