Exchange Traded Funds (ETFs) represent about 1% of the Brazilian fund market. According to JP Morgan Asset Management , this low penetration shows that the country is at the beginning of a cycle that has already progressed in other regions.
“Actively funded ETFs are the biggest structural change in the global investment management industry today. Each market is at a different stage, but the trend is the same and the evolution will continue,” says Travis Spence, global head of ETFs at JP Morgan Asset Management, in an interview with NeoFeed .
With approximately US$4.3 trillion under management, the asset manager understands that the Brazilian market still has very limited options for investors. And perhaps that's why it's small.
In the first quarter of this year, JP Morgan Asset Management launched the JEPI39 ETF in the local market, an actively managed index fund through a Brazilian Depositary Receipt (BDR). By the end of this year, the asset manager projects having nearly 10 of its best products in Brazil.
The JP Morgan Equity Premium Income ETF's BDR, the product chosen to debut in Brazil, is the world's largest actively managed ETF, with approximately US$45 billion under management.
This ETF provides access, in Brazilian reais and through B3 (the Brazilian stock exchange), to an active strategy in US stocks that combines stock selection with the sale of call options, a mechanism known as derivative income . The goal is to maintain exposure to the US stock market, but with lower volatility and monthly income distribution in dollars.
Although they still represent about 10% of the assets of the global ETF industry (with around US$22 trillion), actively managed ETFs have been gaining traction in investment flows: they accounted for 25% of net inflows in 2025 and 38% this year, according to JP Morgan.
The American asset manager is the second largest actively managed ETF company in the US market, with $221 billion under management in a market of over $1.7 trillion. Globally, it has $370 billion in ETFs, of which $280 billion are actively managed ETFs.
During his visit to Brazil, Spence spoke with NeoFeed about the growth of actively managed ETFs, which strategies should lead global expansion, how ETFs are beginning to compete with traditional funds, and why JP Morgan wants to make Brazil one of the fronts of this expansion.
Below are the main excerpts from the interview:
Why have actively managed ETFs become the new frontier of the industry?
The market is entering a phase where the opportunity is much broader. It's no longer just about the Magnificent Seven [Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla] or tech stocks. There's a wider range of sectors, industries, and geographies with earnings growth potential. For us, this means more opportunities for active management. We've seen a lot of interest in active strategies in U.S. equities, global and international equities, and also very strong growth in active fixed income.
What is the importance of an active strategy in fixed income?
In fixed income, especially, most investors want active management, and in a way, need it. Over time, active management tends to surpass passive management in fixed income ETFs. And the ETF vehicle is becoming a preferred way to access this market because it is more efficient, easier to access, and adds layers of liquidity to a market that is often difficult to invest in.
Does this mean a structural migration from mutual funds to ETFs?
Yes. This goes back to a preference for a more evolved vehicle, easier to access, easier to trade, liquid and transparent. Mutual funds remain relevant in various parts of the market, but growth will come from ETFs. I believe that assets in mutual funds should stabilize in some segments and probably continue to decline over time. Active ETFs are the biggest structural change in the investment management industry today. This change happens at different paces in each market, but the trend is the same, and the evolution will continue.
What should fuel the growth of ETFs in the coming years?
There are a number of factors, but the starting point is greater awareness and a growing preference for the ETF vehicle, which we are seeing across all types of investors. Actively traded ETFs continue to be one of the main growth drivers of the industry. Over the past five years, they have grown at twice the speed of the total ETF industry. And this adoption is still only just beginning.
Is this expansion still ongoing?
Last year, actively managed ETFs represented about 10% of the industry's assets, but captured 25% of net flows. This year, that share is already at 38%. We are also seeing record issuance of new actively managed ETFs. Over the next two or three years, this should translate into even greater flows, because there will be more products available and a wider range of options for investors.
What type of investor profile will drive this growth?
There are two groups of investors expected to drive this growth. The first is retail investors, especially outside the United States. In Europe, for example, retail investor participation in ETFs has grown significantly in recent years, partly due to the rise of neobanks, robo-advisors, and digital platforms, where ETFs are the preferred vehicle. The second group is institutional investors, such as pension funds, insurance companies, and sovereign wealth funds. They traditionally used ETFs for tactical and short-term positions. Now, they are beginning to use ETFs as core portfolio allocations. With a global ETF industry worth $22 trillion and an active ETF market of $2.3 trillion, this market has become too large to ignore.
What does an actively managed ETF deliver that a traditional fund doesn't?
A simple way to put it is that an ETF is just a vehicle, just like a mutual fund . But ETFs have several advantages over traditional funds. In many cases, they are more efficient, transparent, easy to trade, and easy to access. Most active strategies in public markets, such as stocks and fixed income, can be done within an ETF. As long as the underlying assets are actively traded, it's possible to have a completely active strategy in an ETF. It's important to emphasize this because many people associate ETFs only with passive management or active index management. But these products are managed asset by asset. There are portfolio managers and research analysts doing the same work you would expect in a mutual fund , only within the ETF vehicle.
Which strategies are gaining more traction?
Within actively managed ETFs, we see three major growth areas: core equities, core fixed income, and derivative-based strategies. In actively managed fixed income, growth has been very strong. The fixed income ETF market is still mostly passive, but when we look at mutual funds, most are active. So there's an important shift starting to happen. The other very relevant category, and one that connects to what we're doing in Brazil, is derivative income . Many investors are somewhat concerned about the current level of the markets. Equity prices are expensive, or perceived as expensive. So they want to remain invested in equities, but with some protection against downturns and with recurring income.
Why are actively managed fixed income and derivative income such important investments?
In fixed income, active management is particularly important because the market is more complex and less standardized. ETFs have become an efficient way to access this market, with greater liquidity and ease of operation. In the case of derivative income , the investor wants to remain exposed to the stock market, but also wants income and some protection. The JEPI (Jet-Invested Equity Investment Program) was designed for this: to offer higher income than that obtained solely from dividends and to reduce volatility compared to broad exposure to the US stock market. What we say about this strategy is that income is the result. The investor remains exposed to the stock market, receives monthly income, and has a structure that seeks to reduce volatility and offer partial protection during downturns.
How does Brazil fit into JP Morgan's ETF strategy?
Brazil is an early-stage market for ETFs, but we believe it has the potential for very strong growth. One of the main conclusions from our recent conversations is that there are still very limited options for the Brazilian investor. The local market has been very passive and focused on domestic investments. There are few options for investors to easily access global markets. JEPI39 is starting to change that. Our plan is to bring many of our best strategies to Brazil through the same mechanism as global ETFs. We want to ensure that when Brazilian investors are building their global portfolios, they can choose from a full range of actively managed JP Morgan ETFs to build portfolios with equities, fixed income, and derivatives-based strategies.
