Sunniva Kolostyak: Welcome to Morningstar, where I’m joined by Piera Elisa Grassi, the managing director of research enhanced strategies at J.P. Morgan Asset Management. Piera Elisa, thank you very much for joining today.
I want to start by talking about J.P. Morgan’s role in the active ETF space. I mean, you’ve managed to capture over 50% of market share in Europe. So can you talk me through what’s behind the success and how you’ve managed to establish yourself as a leader in this space?
Piera Elisa Grassi: Good morning. Thank you for your time today. I’ve managed portfolio low tracking error for now 20 years, and our portfolio tend to offer consistent alpha through time. A low tracking error. And when it comes to active ETFs, we’ve been able to combine tradition of J.P. Morgan DNA coming from decades of running portfolios, at low tracking error, delivering consistent alpha, with the innovation of active ETFs.
So the game changer came from our business in 2018, when we launched the very first four active equity ETFs. Since then, we’ve been able to launch more product, innovate across the board, across region, as well as across the overall ESG space. And the key of the success has been to be able to marry tradition with innovation. The tradition comes through J.P. Morgan’s DNA and the REI strategies, research enhanced index strategies, as we like to call them REI strategies, with the active ETF framework.
I was probably the most skeptical at the beginning of the journey. Back then, we didn’t have the infrastructure. The overall ETF ecosystem work in a different way compared to mutual funds, versus ETFs. The evolution that we have been experiencing has been that we are, operationally and technologically, well-equipped to then expand the business.
Kolostyak: So why do you think that research enhanced strategies are well suited for the ETF wrapper? I mean, what are the benefits to investors from this?
Grassi: Research enhanced index strategies offer consistent alpha through time at low tracking error, which means they are very similar to passive strategies. And that means that they are well positioned to be mixed into the ETF ecosystem. Typically, the clients with access to research enhanced index strategies were large institutional mandates.
But now, the combination of the two allows for better access to a broader type of client. And typically, the fact that we are able to deliver positive, consistent alpha is an appealing feature of the active ETF ecosystem. What makes us different compared to other competitors that are entering the space is the fact that we have best- in-class fundamental research, DNA that we’ve been developing for the last 30 years. We have the best connectivity between our research analysts and our portfolio management team, as well as we are supported by a world-class technological platform called Spectrum.
Kolostyak: So you have been named as one of Morningstar’s ETF leaders. I wonder if, in the spirit of International Women’s Day, can you talk me through your career and the roles you’ve held so far?
Grassi: I have almost 25 years of experience. I have started my career in risk management. In 2004 I joined J.P. Morgan and I joined the research enhanced index team. And I’ve been very fortunate that J.P. Morgan gave me the opportunity to develop and experience different roles within the team. I started as a quant research analyst back then, in 2004. Around 2007, I started to manage money, and since 2014, I’m responsible for the team. And so I covered different aspects of the business throughout my 20 years here at J.P. Morgan. When I joined back in 2004, the team at roughly $1 billion of assets when I took over in 2014, we had roughly $10 billion of assets. And if I look at the business today, we actually have 40 billion of assets running across global and international REI strategies.
One thing to maybe point out with regard to the team, since we’re talking about International Women’s Day, is the fact that the diversity probably is an element that differentiate, myself and the people around me. If we think about the industry and perhaps that the statistics around how many female portfolio managers you can find that out there, roughly we looking at 15%. While you looking at my team and the REI franchise, we have more than 50% of portfolio managers, being female, which I’m really proud for and something that I’ve been fostering over the years. Since 2014, when I took over the team, I made sure of retaining, hiring and retaining top talent. One of the prerogative for me was to hire people smarter than me. And that has paid off for me and for the franchise.
Kolostyak: Well, Piera Elisa, thank you very much for joining today. For Morningstar, I’m Sunniva Kolostyak.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
