JP Morgan and Morningstar team up to launch alt strategy

US financial group JP Morgan has selected Morningstar as strategy allocator for the launch of a new structured product, the JP Morgan Morningstar Alternative Strategy.

The strategy provides exposure to a synthetic basket of mutual funds. Morningstar’s investment management team acts as allocator and selects the basket of mutual funds underpinning the strategy, adjusts their weights on an ongoing basis and reviews both the universe of mutual funds considered and the selected mutual funds.

It will select Ucits alternative funds on a quarterly basis. To be selected, funds will have to be classified within one of the Morningstar alternative categories, which include fixed income, multi asset, and equity funds and currently tally over 2,500 funds.

On a quarterly basis, Morningstar will review again and potentially adjust the universe, and/or the selected mutual funds and weights.

JP Morgan said the initial composition of the strategy will be 40% equities, 45% multi-asset and 15% fixed income.

Nicolas Robin, head of Equity Derivatives Specialist Structuring, JP Morgan said: “Investor appetite for alternatives is rapidly increasing, especially in the current unpredictable market environment. There has been a dramatic increase in the number of active funds available in this space, making it harder to assess the relative qualities of strategies and manager track records when building a balanced portfolio.

“The J.P. Morgan Morningstar Alternative Strategy provides exposure to a basket of alternatives mutual funds selected by Morningstar. It presents an opportunity for investors concerned with capital security and medium-term returns to diversify their approach. Morningstar’s expertise as strategy allocator combined with J.P. Morgan’s ability to provide broad structured solutions for retail and institutional investors, creates an exciting new partnership in the derivatives market.”

Adrien Paredes-Vanheule
Adrien Paredes-Vanheule is deputy editor and French-Speaking Europe Correspondent for InvestmentEurope, covering France, Belgium, Geneva and Monaco. Prior to joining InvestmentEurope, he spent almost five years writing for various publications in Monaco, primarily as a criminal and financial court reporter. Before that, he worked for newspapers and radio stations in France, in particular in Lyon.

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