JPHY Dividend: Next Ex-Date, History & Total Return

JPHY, the JPMorgan Active High Yield ETF, names a high level of current income as its primary objective and capital appreciation as a secondary one. Under normal circumstances it invests at least 80% of its Assets, meaning net assets plus borrowings for investment purposes, in bonds and other debt securities that are rated below investment grade, which the prospectus also calls junk bonds, or unrated.¹

The fund predominantly invests in debt securities and income producing securities, and it also may invest in preferred stock, common stock and privately placed securities. Issuers of debt securities owe interest payments, while dividends on preferred securities are payable only if the issuer's board declares them.¹

Up to 20% of total assets may be invested in other securities, including investment grade securities. The below investment grade holdings may include distressed debt, which includes securities of issuers experiencing financial or operating difficulties, issuers that have defaulted on interest or principal, and issuers that may be involved in bankruptcy proceedings or restructurings.¹

JPHY may use futures contracts, options and swaps to hedge various investments, for risk management and/or to increase income or gain. In particular, it may invest in credit default swaps to gain exposure to other securities in order to mitigate risk exposure or to manage cash flow needs.¹

JPHY is actively managed and aims to outperform the ICE BofA US High Yield Constrained Index, which limits any single issuer to 2% of the index. J.P. Morgan Investment Management overweights and underweights sectors and securities relative to that benchmark based on its research.^1,2

For each issuer, the adviser performs an in-depth analysis, including business prospects, management, capital requirements, capital structure, enterprise value, and security structure and covenants. It generally sells when it believes an issuer's credit quality will deteriorate materially or sees better relative value in securities of comparable quality. The adviser also seeks to assess the impact of environmental, social and governance factors on certain issuers, and the prospectus notes these assessments may not be conclusive.¹

In connection with a company's reorganization, JPHY, alone or with other creditors, may provide financing to a debtor-in-possession by investing in notes or other securities issued by the company. The fund may also hold unfunded commitments, which are commitments to purchase bonds, convertible securities and preferred or common stock.¹

High yield securities risk is central to this fund. The prospectus says junk bonds are considered to be speculative and are subject to greater risk of loss, greater sensitivity to economic changes, valuation difficulties and potential illiquidity. Under weaker covenants, borrowers might be able to incur more debt in ways that could impact creditors negatively. Some instruments may have no active trading market, and if JPHY cannot sell them in a timely fashion, it could take losses.¹

Credit risk is the chance that issuers, guarantors or counterparties fail to make payments when due or default completely. A credit spread is the difference in yield between two securities of similar maturity but different credit quality. Economic and market conditions or actual or perceived credit deterioration may increase credit spreads, which may reduce the market values of JPHY's securities.¹

Under interest rate risk, the value of the fund's bonds generally declines when rates rise, and securities with greater interest rate sensitivity and longer maturities generally are subject to greater fluctuations in value. Under prepayment risk, the issuer of certain securities may repay principal in advance, especially when yields fall, and the fund may then have to reinvest in securities with a lower yield or fail to recover premiums it paid.¹

Derivatives risk covers the futures, options and swaps JPHY may use. The prospectus says derivatives may create leverage and increase the fund's volatility, and certain derivatives expose it to counterparty risk, the risk that the other party will not fulfill its contractual obligations. When used for hedging, a derivative's change in value may not correlate as expected with the risk being hedged.¹