JPIE - JPIE: An Attractive Way To Take Advantage Of Fed Cuts

2024-01-31 11:09:53 ET

Summary

• JPMorgan Income ETF is a fixed income ETF overweight MBS bonds with a 3-year duration.
• The fund's collateral composition is well-suited for the current environment, with a bar-belled approach to its collateral.
• JPIE is an active fund with a high turnover ratio, but outperformed treasuries and MBS ETFs in the past year by a large margin.
• The fund represents a smart way to take advantage of Fed cuts via a short duration profile and a high 6.6% yield to maturity, all while exhibiting very low annualized volatility levels.

Thesis

We were the first to cover the innovative JPMorgan Income ETF (JPIE) on the Seeking Alpha platform here , highlighting the structural features of the fund and collateral allocation within the larger macro framework. Since our coverage in April 2023 there have been significant market changes, including further rate hikes, a market swoon and now an expected monetary easing via lower rates. The fund delivered a positive return since our original coverage, and we expect it to outperform in the next year as the Fed starts cutting rates....

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