“ETFs provide a technologically superior vehicle to traditional mutual funds, offering enhanced tax efficiency, transparency, and price realisation, as exchange prices more accurately reflect underlying assets,” said George Gatch, CEO, in an interview on 19 May 2026 at the European Media Summit organised by J.P. Morgan Asset Management in London. Unlike mutual funds, he argued that ETF investors are not negatively impacted by the transaction costs of others’ inflows and outflows.

Gatch claimed that the active ETF segment represents the most rapidly expanding area of asset management, achieving a compound annual growth rate of nearly 35%. The firm’s ETF business, which currently oversees $380bn in assets under management (AUM), is projected to reach $1trn within the next five years.

Active management defended in fixed income

In the debate between active and passive management, Gatch maintained a steadfast commitment to active strategies. While some data suggests only 11% of equity funds outperform over a decade (see chart 1), Gatch argued that the average manager outperforms in fixed income.

According to Morningstar data (see chart 2), 64.5% of funds in the USD Government Bond category outperformed over five years. However, that success rate fell sharply to 6.7% over a 10-year horizon, a more relevant observation period. A similar pattern emerges across the other bond categories highlighted in chart 2, except for the Global Government Bond category (50.0%). Yet he asked: “Why would you ever buy a passive fixed income ETF?” He noted that 96% of the European fixed income ETF market is currently passive.

Gatch stressed that the firm’s operational strength is reflected the Morningstar parent rating, which was recently upgraded to “high,” from “above average” placing it among the top 20 to 30 fund families globally out of 350.

Fund size risks depend on asset class

While some academics argue that larger funds face a greater risk of underperformance, Gatch countered that capacity constraints are asset-class specific. While US large-cap strategies can manage up to $200bn without performance degradation, less liquid areas like European equities require active management of “size capacity.”

This can result in the “soft closing” of ETFs such as the absolute alpha strategy to fulfil fiduciary duties. “We don’t want to limit the ability of an investment team to outperform markets because of size.”

Managers invest alongside clients

Beyond product structure and scale, Gatch argued that alignment of interests remains central to long-term performance. He explained that portfolio managers are compensated based on performance weighted across three, five, and 10-year horizons relative to benchmarks and peers. Crucially, managers are required to invest their own deferred compensation into their managed strategies, a practice that he noted is rare in the industry.

JPM AM bets on AI and tokenization future

The firm leverages its scale, utilising significant buy-side research teams and significant investments in generative AI and technology to drive performance. Innovation remains central, exemplified by products like the high income covered call equity ETF, currently the world’s largest active equity ETF, which we previously covered here, a product we covered here.

Gatch described tokenization as a major driver of future cost reduction and operational efficiency. JPM AM has established a centre of excellence for digital assets and launched a tokenized US money market fund to allow on-chain liquidity to generate interest on cash. While exchanges may lead adoption of tokenized ETFs, tokenization could reshape security settlements, transfer agency functions, and private market transactions, where digital documentation can simplify costly secondary market trades.

Crisis preparation as a differentiator

Reflecting on historical crises, Gatch recalled his role in advising the US Treasury during the 2008 financial crisis to implement guarantees that stopped a run on money market funds.

The firm differentiates itself through a robust risk management framework, employing 130 professionals—double the industry average, according to Gatch. A formal “stress market protocol,” overseen by the head of risk and the CEO, is activated during crises such as the invasion of Ukraine or the 2023 regional banking crisis. The protocol includes stress-testing 45 million positions and conducting intensive reviews of flows and market functioning.

Europe’s cash pile seen as opportunity

Beyond institutional resilience, Gatch sees long-term growth opportunities in retail investor participation in Europe where over half of household savings remain in cash and deposits, contrasting with the US where 60% is invested in securities. “Savings by individual investors is a public policy question, increasingly,” said Gatch. He added “that is because individuals can't rely on their governments or their companies to be the sole source of their retirement savings.”

Gatch explained that his firm intends to focus on educating investors and working with regulators to strengthen retirement and pension systems. However, it cautions against “misguided” regulatory overreach regarding sustainability, such as Article 8 and 9 rules, which “can be impossible for investors to navigate.” Instead, the firm advocates for simple policies developed through public-private partnerships.

Sylvain Barrette in London

Paperjam was invited to attend the J.P. Morgan Asset Management 2026 European Media Summit in London. The latter paid for accommodation and transportation.