JP Morgan marks ETF debut with government bond index

JP Morgan has entered the ETF market with a fund based on its government bond index (GBI) listed on Euronext stock exchange. The fund will track more than 200 government bonds of countries in the eurozone, and the bank has plans to roll out ETFs across their entire GBI family.

Although JP Morgan has in the past offered ETF launch services, this is the first time that it has created its own ETF, in response to client demand for access to its GBI index. No funds have been launched on JP Morgan indexes before, either by the bank or by third parties.

"We refuse to follow some of the other market participants by issuing huge volumes of ETFs, and have decided to do it on specific, client-based requests with some of JP Morgan's proprietary benchmarks," says Beat von Gunten, the bank's head of structured products marketing for EMEA.

The JP Morgan GBI European Monetary Union "is the most highly followed fixed-income benchmark in markets such as Italy," says von Gunten. The index was created in 1998 and recent valuations estimated its market value at EUR3 trillion.

Once the fund, which is Ucits III compliant, has been established, the company intends to launch ETFs for the whole proprietary GBI family over the coming months. "We want to complete the GBI family, so first will be the GBI US, followed by GBI Japan, then various sub-sectors within Global GBI," says von Gunten.

JP Morgan may build structured products on the fund, depending on the success of the launch, he adds.

Barclays Global Investors launched the first ETF based on a municipal bond index on the American stock exchange in September, while other providers such as SSGA and Powershares launched similar offerings the following month.