Posted in ValuEngine Inc. Thanks to Paul Henneman.
I say this even as I say that I believe this may be part of an emerging trend. Many mutual fund companies that are known for touting active management but had already stuck their feet in the water with ETFs will likely follow suit.
J.P. Morgan Asset Management will liquidate two exchange-traded funds:
JPMorgan U.S. Minimum Volatility ETF, JMIN,
and the JPMorgan U.S. Dividend ETF, JDIV.
The funds are set to be liquidated on Sept. 14.
What does this all mean for holders of JMIN and JDIV? There is absolutely no reason to worry. First, they are protected by the underlying assets VYM, Vanguard High Dividend Yield ETFheld by the fund. I believe that rather than wait for liquidating distributions, most fund shareholders should consider selling their shares online sometime between 10:30 AM and 2:30 PM using limit orders. Both JMIN and JDIV generally have spreads kept $0.01 apart so shareholders should realize a price very close to the fund’s Net Asset Value (NAV).
Why is JP Morgan liquidating these two ETFs that together accounted for approximately $110 Million under management?
JP Morgan Asset Management’s philosophy is that actively managed funds, its core strength,. serve investors better than passive funds. The decision to drop passive products in favor of active has probably been bolstered by the quick success enjoyed by the JPMorgan Equity Premium Income ETF, JEPI. It has accumulated more than $12 billion under management in just two years of existence.
What should investors do if they want to reinvest the cash received for the shares? Our analysis covers 5 ETFs:
USMV, iShares MSCI USA Min Vol Factor ETF;;
VYM, Vanguard High Dividend Yield ETF;
SPHD, Invesco US High Dividend Yield ETF;
DIVZ, True Shares Low Volatility Income;
JEPI, JP Morgan Equity Premium Income ETF.
DIVZ posted the best Sharpe Ratios, hat the lowest Beta and the 2nd best valuation scores. With a VE Best Rating of 5, it may be preferable to JEPI for JDIV and JMIN investors open to active management. As far as the indexed choices are concerned, they have all met their objectives well. VYM with very strong performance, ultra-low fees, the lowest valuation ratios and a VE Rating of 5 would be the first of the 3 I’d recommend researching.