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Rating:JPMorgan Launches Part-Passive TDFs Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, October 24, 2012

JPMorgan Launches Part-Passive TDFs

Reported by Chris Cumming

Defined contribution plan sponsors looking for passive target date options now have a little more flexibility. J.P. Morgan Asset Management's Global Multi-Asset Group has announced the debut of a new line of target date funds with a passively managed component.

The ten new SmartRetirement Blend funds will use the same glide path and asset allocation models employed by the SmartRetirement funds, JPMorgan's flagship TDF series, which has over $12 billion in AUM. But while the existing SmartRetirement funds are actively managed, the SmartRetirement Blend series will use indexed-based third-party ETFs to allocate certain large, liquid asset classes, like U.S. equities.

"What we're seeing in the DC industry is demand for active and passive strategies," said Daniel Oldroyd, a portfolio manager in JPM's global multi-asset group. "The new funds use the same glidepath as the SmartRetirement series, and they have the same goal: to get as many participants as possible to retirement with a minimum income replacement ratio."

The SmartRetirement Blend funds will have a lower expense ratio than the all-active SmartRetirement series. Oldroyd said that the R6 shares of the SmartRetirement Blend strategy will be cost approximately 45 basis points, compared to 61 through 77 bps for the institutional shares of the SmartRetirement series.

Oldroyd said that as far as he knows, these are the first TDFs to combine proprietary active management with third-party passive management. As for which third-party ETFs the funds will include, Oldroyd said that "you can expect to see" large ETF providers like BlackRock and Vanguard.

JPM's target-date series have a larger concentration of commodities and alternative asset classes than typical TDFs. The SmartRetirement funds added a commodities allocation last year.

"One of the ways we get participants to the finish line is by using extended and alternative asset classes," said Oldroyd, adding that the inclusion of alternative investments stems from the firm's research. "We've spent a lot of time researching the typical participant and how that behavior impacts the savings behavior," he said.

The PM team for the SmartRetirement Blend series will be headed by Anne Lester, according to the company press release announcing the new funds.

The funds were originally filed with the SEC this summer, and are now available for sale. Oldroyd said that the firm has "seen a fair amount of activity" among plan sponsors so far. 

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