Head of Canada for JP Morgan Asset Management celebrates successes, sets new targets, and reflects on why Canadian investors seem to love income
In early October of 2024, JP Morgan Asset Management (JPAM) launched their first two ETFs on the TSX. While the asset management behemoth has been active in the Canadian market for decades, and their US products have long been accessible for Canadians, the move represented a new jump directly into the Canadian retail advisor market for this firm. In the year since that first launch the firm’s TSX-listed suite has grown to eight ETFs, with two new products being launched in recent weeks.
When the firm first launched Canadian ETFs in 2024, the firm’s Head of Canada Travis Hughes told Wealth Professional what the firm’s goals in the Canadian market were. They aimed to stay in the strategic niche of actively managed products, to offer Canadian-listed versions of some of JP Morgan’s most successful global strategies, and to offer a standard of service that reflects the reputation of his firm. One year later Hughes reflected on how far his firm has come in pursuit of that goal.
“We've invested significantly into the business. We've gone from seven client-facing individuals to 22 individuals. We opened an office in Montreal. We have over 40 individuals supporting our business globally now. So there's been a lot of a lot of resources and attention put on the Canadian enterprise. And then from a growth standpoint, all three of our key lines of businesses have really done well. Our institutional business, our sub-advisory business, and then our newest business, which is the ETF and advisor channel. So overall, AUM over the last three years is up about 60 per cent to close to $48 billion. Revenue is up. So like all the key metrics from a business standpoint are definitely turning in the right direction.”
Hughes describes the reception his firm has received in the marketplace as “phenomenal.” The first two products launched by JPAM in Canada, Hughes notes, have been the best received. The JPMorgan US Equity Premium Income Active ETF (JEPI) and the JPMorgan Nasdaq Equity Premium Income Active ETF (JEPQ), both actively managed strategies with covered call option overlays, are the two largest JPAM products in Canada by AUM. As their product shelf has grown, though, Hughes has seen greater interest in other strategies.
For all their successes, Hughes notes there have been some lessons learned over the past year. He notes that the firm’s long-term focus in their strategies has sometimes meant focusing on areas like value which haven’t picked up the same momentum over the past 12 months. Nevertheless, they want to maintain the option of building a diversified portfolio with their products.
Hughes also notes the issue of currency risk that impacted some JPAM Canadian ETFs this year. Those strategies were all initially offered unhedged while tracking US assets. That currency dynamic impacted overall performance as CAD rallied against the USD. While a secular decline in the global reserve currency was something nobody predicted going into 2025, Hughes notes that new strategies are being rolled out with hedged and unhedged versions available.
The latest ETFs from JPAM are both income-related products the JPMorgan US Ultra-Short Income Active ETF (JPST) and the JPMorgan US Bond Active ETF (JBND) are the firm’s first Canadian-listed fixed income products. Hughes describes these products as another example of the firm’s strategy to take vehicles that work in other markets and Canadianize them.
This foray into fixed income, as well as the income components of their first Canadian ETFs, highlight what has sometimes been remarked upon as a trend in the Canadian investment landscape: a preference for income. Hughes notes that trend and highlights that the Canadian perceived preference for payouts is often presented as a pejorative. He argues, rather, that income plays a key role in total returns and that even some of the largest and most sophisticated institutions will prioritize cash flow in their strategies. He notes that income is a feature of Canada’s equity market, which skews towards dividend payers, and that investors who already know how useful investment income is will often be more favourably disposed to other income strategies.
Looking ahead to growth goals in future, Hughes says that JPAM will continue to focus on intermediaries, be they institutions or financial advisors. He says that the firm is targeting a final roster of around 12 to 15 ETFs in the Canadian market by final count, but that 2026 will serve as a consolidation year with fewer launches than 2025, followed by a ramp up in 2027.
“The goal is never to be the largest asset manager in the world, but to focus each and every day on being the best manager in the world,” Hughes says. “To us, these three things. One is we have to deliver results. Those are table stakes, but that's the number one thing. Secondly, to provide the absolute best service in the entire industry. And then third, we have to connect those investors to the intellectual capital and resources of our firm. If we do those three things well, we believe that AUM and all those other kind of industry accolades will follow suit."
