JPMorgan Chase Prepares to Launch Its First Interval Fund
JPMorgan Chase filed a preliminary prospectus with the U.S. Securities and Exchange Commission for what would be the firm’s first closed-end interval fund.
JPMorgan Credit Markets Fund will primarily invest in corporate loans and bonds as well as collateralized debt obligations, collateralized loan obligations, structured investments, asset-backed securities, and private funds.
J.P. Morgan Investment Management Inc. will serve as its investment adviser – responsible for making investment decisions for the fund’s portfolio.
To manage the liquidity of its investment portfolio, the fund will also invest a portion of its assets in a portfolio of short-term debt securities, affiliated and unaffiliated money market securities, mutual funds and/or exchange-traded funds, cash, and/or cash equivalents.
The closed-end fund seeks to reach JPMorgan’s enormous network of wealth management clients, including high-net-worth investors who use the private bank and depositors who keep their funds at Chase Bank.
The fund will offer on a continuous basis three separate classes of shares of beneficial interest: Class S, Class D, and Class I. The share classes have different ongoing shareholder servicing and/or distribution fees. The purchase price per share for each class equals the fund’s daily net asset value per share. The fund went on to state that no person who is admitted as a shareholder will have the right to require the fund to redeem its shares.
According to JPMorgan Chase, the fund will pay asset-based fees, and, in most cases, will be subject to performance-based fees in respect of its interests in portfolio funds. These fees and performance-based compensation will be in addition to the advisory and incentive fees. Also, the company said that performance-based fees charged by portfolio fund managers may create incentives for the portfolio fund managers to make risky investments and may be payable by the fund to a portfolio fund manager based on a portfolio fund’s positive returns even if the fund’s overall returns are negative. Finally, fund shareholders will indirectly bear a proportionate share of the fees and expenses of the portfolio funds, in addition to its proportionate share of the expenses of the fund.
The majority of fee categories framed in the prospectus were not listed at this time; the prospectus noted that the fees would be based on the estimated expenses of the interval fund for the fiscal year, ending March 31, 2025.
