JPMorgan Asset Management is doubling down on active fixed income with the introduction of its newest product, the JPMorgan Mortgage-Backed Securities ETF (NYSE:JMTG).

The launch follows on the heels of its record-breaking Active High Yield ETF (BATS:JPHY), which debuted with a record $2 billion in initial assets, the biggest active ETF launch to date.

With more than $55 billion of active fixed income ETF assets, JPMorgan is still the leader in this expanding niche. JMTG is the company’s newest mutual fund conversion, offering investors specific exposure to the mortgage-backed securities (MBS) market, a niche in fixed income frequently underappreciated but with stable cash flows and diversification appeal.

With a 0.24% expense ratio, JMTG is a relatively low-cost entry into the MBS market for those looking for steady income without committing fully to high-yielding territory.

Long-Term Play In The MBS Market

JMTG invests mainly in investment-grade residential and commercial MBS, such as securities issued by government-sponsored agencies like Freddie Mac and Fannie Mae, non-agency, and private-label MBS. The fund’s holdings also include unrated securities of comparable quality, private placements, and zero-coupon bonds.

For long-term investors, the ETF’s strategy focuses on diversified exposure over interest rate environments and credit cycles. The portfolio managers evaluate a variety of factors--duration, interest-rate risk, credit quality, and liquidity--when choosing securities. At inception, the fund consisted of 2,425 unique MBS, with a minimum of 65% in bond form, and a target maturity of two to ten years.

Earlier this year, JPMorgan submitted paperwork on its plans to convert four mutual funds, totaling $7.2 billion in assets, into ETFs.

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