It’s unfair, but names make news that would be ignored if it came from those lacking celebrity. There’s nothing especially noteworthy about a couple of new exchange-traded funds (ETFs) being added to the Toronto Stock Exchange. TMX, the company that oversees the exchange, had listed more than 100 of the relatively low-cost savings vehicles through early August.

Yet heads turn when JPMorgan Chase joins even the most crowded party. The asset-management arm of the world’s most admired bank has released a handful of ETFs for Canadian investors this year, including two new fixed-income offerings on Wednesday. “It reinforces our commitment to the Canadian market and the business that we’ve been building here over the last several years,” said Travis Hughes, who oversees JPMorgan Asset Management’s operations in Canada.

There are probably things to learn from where some of the world’s best bankers see opportunity—and where they don’t. Unlike many of the issuers of ETFs on the Toronto Stock Exchange (TSX), the business is a sideline for JPMorgan. Because it doesn’t need to collect trading and advisory fees to survive, it can pick its spots.

Wall Street analyst Mike Mayo calls JPMorgan the “Goliath of Goliaths” and the “Nvidia of banking.” The company’s chief executive, Jamie Dimon, is one of the few old-economy bosses who rivals Silicon Valley’s titans in terms of celebrity and influence. The Economist said earlier this year that Dimon could be on his way to creating the first US$1-trillion bank. 

Goliath treads with a light footprint in Canada, a tantalizing market for bankers because of its large stores of wealth and low rates of bankruptcy. But strict foreign-investment rules and a deeply entrenched oligopoly make it a difficult market for even the mightiest international banks. The most recent to try to secure a noticeable foothold—ING of the Netherlands and the U.K.’s HSBC—ended up retreating, surrendering their assets to Scotiabank and Royal Bank, respectively. 

Spain’s largest bank, Santander, could be the next to test the oligopoly’s walls after securing a banking license in April. JPMorgan, which has operated in Canada since the 19th century, is content to graze around the edges. The bank has offered asset-management services since the 1980s, but has mostly avoided head-to-head competition with the Bay Street incumbents. “We don’t manage Canadian equities, we don’t manage Canadian fixed-income,” said Hughes. “So more often than not, we’re looked at as a potential partner for some of these institutions versus as a competitor in some of the key asset classes.” 

That might be changing, at least a little bit. Over the past few years, Hughes has added an office in Montreal to complement existing outposts in Toronto and Vancouver, while expanding his team of “client-facing individuals” to 22 from only seven before the strategy shift. Most of the money that Hughes makes for his employer still comes from providing services for big investors such as insurers and other asset managers, but retail is also part of the plan. 

The first ETF was created in Canada in 1990, but local investors were slow to embrace them compared with most of the rest of the world, Hughes said. That started to change in recent years, and JPMorgan spotted an opportunity. A year ago, the firm listed some U.S. equity funds, and since that time, assets under management in that segment have grown to some $2 billion. 

That’s a testament to the power of reputation, mixed with an epic rally in American stock markets. If JPMorgan opted to enter the Canadian ETF market by tapping the enthusiasm for U.S. stocks, then it might be worth emphasizing that its new funds were created for investors who crave safety. The main U.S. stock indices keep setting records, but amid growing trepidation that the bubble is about to burst. The rally remains highly concentrated in the technology companies at the forefront of artificial intelligence. 

Like previous general-purpose technologies, AI will be revolutionary, but as former Bank of Canada governor Stephen Poloz told an audience last month, such technological revolutions tend to produce “stock market bubbles and crashes; a K-shaped economy of winners and losers; rising income inequality; even more political polarization, populism and isolationism; and of course, geopolitical adventurism.” Any investor with a sense of history will be looking for places to hide from what’s coming. 

One of JPMorgan’s new offerings is an income fund that invests in short-term corporate and structured debt, and the other invests in U.S. bonds. The timing for their debut on the TSX was inauspicious as it coincided with the shutdown of the U.S. government, the latest example of the sort of chaos that Poloz talked about. But despite the “sell America” trade, U.S. debt will remain a haven, if only because there is so much of it and it’s easy to sell. Canadian investors added a record $16.6 billion in international bonds in July, and almost 80 per cent of them were American, according to Statistics Canada. 

“We’ve seen more interest in fixed income, given uncertainty from the geopolitical standpoint, economic [and] market environment and our clients looking to get more exposure, or take a close look at what they are doing on the fixed-income side of their portfolio,” Hughes said.  

Banks tend to amplify bubbles, but that doesn’t mean they can’t also help deflate them. ETFs are most commonly associated with passive investing, a low-fee approach to investing that involves buying funds that mirror an index. The strategy has become so popular that more capital is now being allocated by auto-pilot than by active managers seeking value based on relative prices, according to a recent paper by Chris Brightman and Campbell Harvey of Research Affiliates, an asset management firm.

Brightman and Harvey reckon that phenomenon is amplifying the demand for the biggest technology stocks by crowding out investors who buy and sell stocks based on fundamentals, and therefore raising the risk of a bubble. “When prices are pushed away from fundamentals by non-economic flows, they tend to mean-revert, often abruptly,” they wrote. 

The next trend in investing could be a move back to active management, despite the higher fees. JPMorgan’s Canadian ETFs? All are actively managed. It might be a signal. 

Kevin Carmichael is The Logic’s economics columnist and editor-at-large. He has spent more than two decades covering economics, business and finance for outlets including Bloomberg News, The Globe and Mail and the Financial Post, where he also served as editor-in-chief.