JPMorgan has introduced plans for a new ETF targeting exposure to Nasdaq-100 stocks while incorporating options to safeguard against market downturns, as detailed in a recent Securities and Exchange Commission filing.
The JPMorgan Nasdaq Hedged Equity Laddered Overlay ETF will allocate at least 80% of its assets to equity securities, supplemented by an options strategy designed to deliver continuous market hedging. This launch signals JPMorgan’s ongoing expansion in its $165.8 billion ETF business, catering to the growing appetite for risk-managed investment strategies.
Catering to Growing Demand for Hedged Strategies Investors increasingly seek protection against downside risk, making options-based strategies highly attractive. JPMorgan’s existing products, such as the popular JPMorgan Equity Premium Income ETF (JEPI), have amassed $36.1 billion in assets, underscoring the demand for ETFs that combine equity market exposure with options-driven risk mitigation.
Innovative Laddered Options Framework
The proposed ETF employs a “laddered” options framework, a strategy designed to reduce concentration risk. It holds options positions across three different three-month periods, staggered one month apart, ensuring consistent protection over time.
According to the filing, the fund’s core strategy involves purchasing put options at higher strike prices and selling puts at lower strike prices to create spreads that buffer against market declines. Additionally, it will sell call options to offset costs, a tactic that could cap potential gains in bullish markets.
However, the filing emphasizes that the strategy may not always outperform traditional equity investments, particularly during extended market rallies, as the upside is likely to be constrained by the options overlay.
Seasoned Team at the Helm
The ETF will be managed by a skilled team, including Hamilton Reiner, Eric Moreau, Andrew Stern, Matt Bensen, and Judy Jansen. While the filing does not disclose the expense ratio or the exchange on which the fund will trade, the leadership team’s expertise suggests a well-considered approach to execution.
Further Expansion of JPMorgan’s Active ETF Offerings
This development aligns with JPMorgan’s broader strategy to enhance its active ETF lineup, which already includes top performers like the $26.9 billion JPMorgan Ultra-Short Income ETF (JPST). Both JEPI and JPST are among the largest actively managed ETFs in the industry, reflecting strong investor confidence in the firm’s ability to deliver competitive, risk-adjusted returns.
Wealth advisors and RIAs may find this ETF appealing for clients looking to stay invested in growth-oriented Nasdaq-100 stocks while mitigating downside risk through a disciplined, structured options strategy.
