JPMorgan has filed for a new exchange-traded fund (ETF) designed to give investors exposure to Nasdaq-100 stocks while using an options-based strategy to hedge against market downturns. The JPMorgan Nasdaq Hedged Equity Laddered Overlay ETF plans to allocate at least 80% of its assets in equity securities, while implementing a hedging strategy to offer continuous market protection.
This fund is JPMorgan’s latest move to expand its $165.8 billion ETF business, following the growing trend of investors seeking options-based strategies to shield portfolios from potential market declines. JPMorgan’s existing options ETFs, like the JPMorgan Equity Premium Income ETF (JEPI), have attracted substantial interest, with JEPI alone amassing $36.1 billion in assets.
The fund will employ a “laddered” options approach, maintaining positions across three different three-month periods, staggered one month apart. This structure is designed to manage risk by diversifying hedging strategies over time. The ETF will also utilize put spreads (purchasing puts at higher strike prices and selling them at lower strikes) to mitigate potential market drops and offset the cost of options by selling call options, although this could limit upside potential in rising markets.
JPMorgan acknowledged in its filing that while this strategy aims to protect against market downturns, it might not always outperform traditional equity investments, especially in bullish market conditions.
A team of JPMorgan experts including Hamilton Reiner, Eric Moreau, and others, though the filing did not specify the expense ratio or the exchange on which the fund will trade, will manage the fund.
This filing further solidifies JPMorgan’s growing presence in the active ETF market, which includes successful funds such as the $26.9 billion JPMorgan Ultra-Short Income ETF (JPST). Both JEPI and JPST rank among the largest actively managed ETFs in the industry.