VIDEO: ETF of the Week: JCPB

On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discussed the JPMorgan Core Plus Bond ETF (JCPB) with Chuck Jaffe of Money Life. The pair discussed several topics related to the ETF, in order to give investors a deeper understanding of it. 

Chuck Jaffe: One, fund on point for today. The expert to talk about it. This is the ETF of the Week! 

Yes, welcome to the ETF of the Week, where we get the latest take from Todd Rosenbluth. He’s the head of research at VettaFi. And if you go to ETFDb.com, which is a VettaFi site, you’re going to find all the tools you need to be a savvy or smarter ETF investor, and to get more details on the new, newsworthy, trending, and timely ETFs we talk about here! 

Todd Rosenbluth, great to chat with you again!

Todd Rosenbluth: It’s great to be back, Chuck.

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The JPMorgan Core Plus Bond ETF. JCPB.

Chuck Jaffe: JCPB, the JPMorgan Core Plus Bond ETF, a blue-blood kind of fund from a blue-blood firm with a great track record. But what brings it into your sights this week?

Todd Rosenbluth: So, I was looking at flows this year, and actively managed fixed income ETFs have more than a third of the net new money that’s gone into fixed income ETFs. In fact, it’s closer to 40%. 

Active fixed income ETFs have been popular as investors try to navigate the challenges of the bond market. They’ve been turning to this JPMorgan fund, which [has]gathered about $1 billion in the past month. It’s gathered almost $5 billion this year. We think investors are already discovering it, and more people should learn more, given the demands of the ETF marketplace.

Chuck Jaffe: Performance has been very good for this fund. But what makes it stand out to you, compared to other actively managed bond funds? Because we’ve looked at a few of them here!

Todd Rosenbluth: We have. And I don’t think we’ve talked about JPMorgan’s suite of products, so that’s why I wanted to highlight it. You’re right. It is outperforming the Agg  — that’s the reference point that many people have, that’s the Bloomberg Aggregate Bond Index. There’s a couple of ETFs, including AGG, that track it. This fund is outperforming the Agg. It’s actually outperforming its peers. I believe it has a four-star rating from Morningstar over its track record.

It has a long track record. Active fixed income ETFs have been growing in size, in both popularity as well as supply. But this fund [has]more than six years of history that’s been quite strong. I think it manages its risk profile well, not taking on too much duration risk and adding in exposure to some other bond sectors you wouldn’t normally get exposure to within the Agg. And JPMorgan is just well known for their active ETF lineup.

Chuck Jaffe: You talk about it getting exposure to some bond sectors you might not have. This is a total bond market ETF. So, when it’s getting exposure to different sectors, is that just because it covers the whole thing, or is that a managerial tilt here?

Todd Rosenbluth: So, management has the ability to take on additional risk and invest in other asset classes, and has done so. You will find non-investment-grade corporate bonds in here. You’ll find agency bonds within it. There’ll be some exposure to treasuries and investment-grade corporates that you’d find. So I like that this fund has the flexibility. That’s the plus of a core plus bond strategy — it has the flexibility to invest in the best areas of the bond market according to management. And it’s taking advantage of it, and it’s working. 

It won’t always work. Obviously, taking on risk comes with risk, and as such, you might be punished. But I think JPMorgan does a good job of diversifying across the bond sectors.

Chuck Jaffe: You mentioned the Morningstar rating on this fund — four stars. It also gets a Gold Analyst Rating. And from Lipper, it gets top marks for total returns, consistent returns, and perhaps most importantly when it comes to bond funds — expenses. And that’s not always something — a low expense — that you expect from a blue blood like JPMorgan. 

So, let’s talk about expenses and also yield, because here we are talking about a bond fund. If it’s not paying you enough yield, it’s not worth it.

Todd Rosenbluth: The yield is roughly 5% — that’s the 30-day SEC yield. So you are getting rewarded for some of that additional risk. I believe the expense ratio is just under 40 basis points, which is quite reasonable for an actively managed fixed income strategy. You can find some cheaper versions that are out there; those funds may not have the same track record, or they may not have the same longevity of that track record. 

And then certainly, you can get index-based exposure for under 10 basis points. So, the fee for this JPMorgan product uses JPMorgan’s scale as an advantage. I think it’s appropriate, and you are getting that net-of-fees 5% yield, which is compelling.

Chuck Jaffe: You know, I mentioned at the setup that folks can do more research at ETFdb.com, and you are always gracious about quoting VettaFi’s competitors like Morningstar and Lipper. But one of the things that the ETFdb report says about this fund is that, effectively, if you’re buying it now, you’re kind of making a bet on the manager’s ability to outperform the market. 

But…bonds have been one of the places where active management has been able to beat the market, given the conditions we’ve got and the uncertainty with the Fed, but also the potential for us to now be flat for longer — like, not have a rate environment that’s necessarily changing for a while. Do you think active management on fixed income [is]still the place to be?

Todd Rosenbluth: So, I think you set up exactly why people are turning towards active fixed income strategies. So when you’re not sure of the Fed’s next move — and I’m not sure, and many investors might not be sure of the Fed’s next move, whether they’re going to hike or they might cut, and in all likelihood, they’re going to stay pat for a while — active management is where you can find the opportunities. 

Because those managers are looking for the bonds and the bond sectors where there’s the best opportunity, as opposed to just riding the market higher and continuing to benefit if the Fed cuts rates, that would be a good thing. If the Fed is going to be hiking, you want to have the ability to adjust and have the management team to adjust.

And we’ve seen people increasingly turn away from certain index-based products, because the Agg is not a complete benchmark. It’s weighted to the largest companies from an issuer standpoint, so the more indebted a company is, the greater the weighting could be within the Agg. And so we think that right now active is a good way to take advantage of that and find those best opportunities, until we perhaps have better benchmarks out there.

Chuck Jaffe: You talked about how much money has flooded into this fund. I can’t imagine that you have a worry that a firm this big, a fund this big, that there is that big rush of money. If it were a small fund, maybe you’d worry about it being put to work. 

But this is a fund that’s about to top $14 billion in assets. Does there come a point with a bond fund that you worry that it’s getting too big, or no, it’s bonds — there’s such a big market out there, get as big as you want?

Todd Rosenbluth: I think there’s a lot of liquidity within the bond market overall. This is still a relatively small fixed income ETF. $14 billion is large, but we’ve got bond ETFs that just crossed $100 billion in assets under management — those are index-based products. This, I believe, is among the largest of those actively managed fixed income ETFs. JPMorgan offers a larger fund that is ultra-short in nature: JPST. That fund takes on almost no interest rate risk. This fund, JCPB, takes on some interest rate risk. But I’m not worried about the fund being too large. In fact, its popularity is encouraging us to talk more about it, and I think it is likely to cause more people to take a closer look.

Chuck Jaffe: If somebody already has a total bond market fund, is this worth adding to it? I mean, it is a core piece of a portfolio, but if you’ve already got that core piece, is this an upgrade? Something to only use if you’re dissatisfied, or do you want to have more active management so you split your total bond stuff in two, or something like that?

Todd Rosenbluth: So, we’ve seen many advisors and investors have two different fixed income ETFs that are in the core or Core Plus suite. They might take a low-cost, index-based approach and own the AGG—AGG and BND are a couple of examples: AGG from iShares, BND from Vanguard. That’s the low-cost, index-based approach. And then complement that with an active ETF like this one from JPMorgan, where you are taking on a bit of the risk and investing in some of the sectors you wouldn’t otherwise have exposure to. 

Some people have exposure to active fixed income through mutual funds, and they may want an ETF alternative because it is cheaper, because it’s more liquid, and because they are increasingly turning towards ETFs. And this JPMorgan product could be a good alternative, either as a standalone or, I guess, as a complement.

Chuck Jaffe: It’s JCPB, the JPMorgan Core Plus Bond ETF, the ETF of the Week from Todd Rosenbluth at VettaFi. Todd, great stuff. We’ll see you again next week!

Todd Rosenbluth: Thanks a lot, Chuck!

Chuck Jaffe: The ETF for the week is a joint production of VettaFi and Money Life with Chuck Jaffe. And yep, I’m Chuck Jaffe. That’s me! You can learn all about my hour-long weekday show by going to MoneyLifeShow.com. Better yet, search for it wherever you find your favorite podcasts!

Now, if you’re searching for great information on ETFs or you want more information on the funds we talk here, look no further than ETFDb.com. That’s a site that’s run by VettaFi that has all the tools you need to be a better investor. They’re on X at @ETFDb and Todd Rosenbluth, head of research at VettaFi, my guest, he’s on X too. He’s at @ToddRosenbluth. 

The ETF of the week is here for you every Thursday. Follow us on your favorite podcast app to make sure you don’t miss an episode. And we’ll introduce you to another great ETF again next week. Until then, happy investing everybody!

For more news, information, and strategy, visit the Fixed Income Content Hub.

Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.

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