The decision to launch in Canada — despite the availability of these ETFs to Canadians via US markets — has to do with minimizing the cross-border nuances that might have challenged some investors. The US versions of these ETFs paid distributions in USD, which was less advantageous to Canadians. The broad structure, too, was less suited to Canadian tax.
The ETFs themselves hold actively managed portfolios of US equities, with options selling strategies overlaid to add income. Hughes notes that they launched these ETFs in Canada because they are among the most popular products in the US market. That said, he also accepts a bit of a Canadian preference for income — whether through fixed income, dividend equities, or covered call options.
These ETFs, however, are only the tip of the spear for JP Morgan in the Canadian ETF market. Hughes explains that Canadian investors can expect to see more ETFs brought to market where his firm believes they have a competitive advantage and they can leverage their global presence. That means they are unlikely to be offering Canadian equity or fixed income strategies anytime soon. They also won’t be offering index based portfolios as JPMAM is an avowedly active shop.
The areas that Hughes says we can probably expect products for include global equities, US equities, fixed income, and more options strategy ETFs. They are also exploring the idea of private asset products, aiming to capture some of the $40 trillion growth market for private assets.
“Our goal is not to have a huge platform of ETFs available in Canada,” Hughes says. “We will be very targeted with the relatively short list of best-in-class solutions, and I think they’ll also be consistent with where we’ve had success globally.”
