JPMorgan, the world's largest investment bank, has entered the exchange-traded fund (ETF) market to tap into the enthusiasm of Asian retail investors for U.S. tech stocks. Global asset managers are seen stepping up strategies to capture funds from Asia's retail market by riding the rally in U.S. big tech.
According to Bloomberg on the 26th (local time), JPMorgan Asset Management listed an active ETF in Taiwan this month that tracks large U.S. technology stocks and said it will take general subscriptions from the 30th to the 3rd of next month. JPMorgan Asset Management said expanding its active ETF lineup across Asia is a core goal for business growth.
In Asia, launches of ETFs focused on U.S. tech stocks are growing rapidly. According to Bloomberg Intelligence, a research arm of Bloomberg, 19 related ETFs have been launched this year and are expected to surpass last year's 22. A total of 63 U.S. tech ETFs are currently listed in Asian markets. As the rally led by large U.S. tech stocks continues, investors are seeking direct investment vehicles. Since the end of 2022, the Nasdaq 100 index has more than doubled, and the so-called "Magnificent 7 (M7)" names—Apple, Microsoft, Nvidia, and Tesla—have led the gains.
Concerns about overheating have also emerged. More than $500 million has flowed out of Asia-listed U.S. tech ETFs over the past three months. There are warnings that concentration risk is rising as money crowds into specific names. Even so, the segment has seen net inflows of more than $4.3 billion over the past three years. The Nasdaq 100 index has risen more than 4.5% in September, hitting its highest level since June. Investors said they expect the uptrend to continue, citing expectations of Federal Reserve (Fed) rate cuts and growth in the artificial intelligence (AI) industry.
Rebecca Shin, an ETF analyst at Bloomberg Intelligence, said, "In Asia, the U.S. technology space continues to show strong growth and offers many opportunities for issuers." Shin added, "Given this year's strong tech earnings, the recent outflows are likely the result of profit-taking."
Asia's ETF market is growing overall. In the first eight months of this year, there were 461 new listings, and the total is expected to surpass last year's 508. Asia's ETF asset size is currently estimated at about $2 trillion and is expected to grow to $8 trillion by 2035. Notably, China is expected to lead the growth. Considering that the U.S. ETF market stands at about $12.5 trillion, Asia's market is expanding at a fast pace.
Starting with the Taiwan listing, JPMorgan plans to expand its ETF business across Asia. Philippe El Asmar, JPMorgan's head of ETFs for Asia-Pacific, said, "Active ETFs will be an important pillar of the company's growth in Asia."