BLACKROCK is the latest exchange-traded fund (ETF) issuer to take aim at the runaway success of JPMorgan Chase & Co’s biggest active strategy.

The actively managed BlackRock Advantage Large Cap Income ETF (BALI), which began trading on Thursday (Sep 28) and charges 35 basis points, tracks dividend-paying stocks in addition to selling S&P 500 call options to generate additional payout streams, according to a press release.

The new BlackRock fund resembles the US$29 billion JPMorgan Equity Premium Income ETF (JEPI), which also tracks US stocks and uses a call-writing strategy to produce a steady stream of income. JEPI soared to the top of the active ETF leaderboard following last year’s nearly US$13 billion haul – breaking the record set by Cathie Wood’s Ark Innovation ETF (ARKK) in 2020 – and is now on track to surpass that mark with year-to-date inflows of roughly US$12.2 billion.

Its popularity has spurred a wave of copycat funds. In addition to BALI, Goldman Sachs Group and REX Shares have also applied for lookalike funds as JEPI continues to attract billions of US dollars.

“Every now and then, an ETF becomes a surprise blockbuster hit and inspires a lot of copycats,” Bloomberg Intelligence senior ETF analyst Eric Balchunas said. “JEPI is that ETF right now.”

A BlackRock spokesperson said that “one of the differentiations is that BALI offers investors more growth potential”, in response to a request for comment.

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JEPI has benefited from the Federal Reserve’s aggressive rate hiking campaign, which has rattled equity and fixed-income markets alike. The ETF dropped just 3.5 per cent on a total return basis in 2022, versus an 18 per cent plunge for the S&P 500. While JEPI has lagged the index in 2023, it’s outperformed over the last three months as the central bank’s higher-for-longer resolve sinks into the market psyche.

It’s a similar phenomenon to what happened when Wood’s ARKK surged nearly 150 per cent in 2020. A spate of innovation- and disruption-themed ETFs from rival issuers debuted soon after. The BlackRock Future Innovators ETF, which launched in September 2020, is being liquidated in November.

“We also saw this with ARKK, where there were approximately 30 me-too ‘innovative tech’ ETFs rolled out,” Balchunas said. BLOOMBERG