By Brendan Conway

In the same week that J.P. Morgan Chase (JPM ) announced deep cuts in its mortgage-lending business, the firms push into exchange-traded funds is coming into public view.

Last night, JPM detailed three planned offerings in a regulatory filing which underscore an interest in smart beta ETFs. The envisioned funds look a bit like Northern Trusts FlexShares. the best example of an old-line bank making a sudden success in fast-growing ETFs.

Smart beta means building a funds investing strategy according to desirable attributes like large or growing dividends, strong profitability or low stock volatility, instead of the more conventional stock-market value approach. The trio of funds unveiled last night are so-called multi-factor strategies, meaning they use more than one investing attribute.

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JPMXF Diversified Return Global Equity ETF  and JPMXF Diversified Return International Ex- North America Equity ETF. are built with four attributes in mind: (1) finding stocks which exhibit low volatility, (2) stocks with value characteristics, (3) momentum and (4) size. The JPMXF Diversified Return Emerging Markets Equity ETF is envisioned for three: value, momentum and quality. Theyre slated to use FTSE Group  indexes.

I had a chance this week to catch up with Bob Deutsch. head of the company’s ETF business, which has hired about 20 people and has plans for more this year. Among other indications that the business is getting off the ground, Deutsch said the company recently was noticed by the SEC for exemptive relief, which is an important regulatory step toward building ETFs.

When thinking about the three planned offerings, Deutsch said low volatility is key for the two which are built to use that factor but he emphasized the multi in these ETFs multi-factor investing.

The combination of factors is what we see as a real differentiator, Deutsch said. We think it provdes a better risk-adjusted return over time than single-factor models.

Is that a knock against funds built just for value investing or low volatility? Theres n othing wrong with a momentum product or value product, Deutsch said. What we find over full market cycles [is] the combination of the factors we put together really add value.

How does JPM expect investors to use these ETFs? I t is a core type holding [and] its a complement to other core products. Those others could be traditional index or active management.

Deutsch couldnt say when the new offerings will launch, citing regulatory procedures, but heres how he reacted to expectations for a launch some time this year: I dont think it would be off base.

Smart beta is a term thats raised hackles for its fuzziness as well as what some observers view as an implicit promise of beating the market, even though thats not guaranteed by any stretch. Is the controversy an issue?

Its a term the industry uses, and I dont have something to offer in terms of a better one, Deutsch said, adding, I do think there is a recognition that traditional market cap weighted index funds have unintended biases, and that because of those unintended biases, investors should at least consider other ways to invest. [These] smart beta, factor-based products use factors that are proven to drive returns over time.

Its still full steam ahead on active, Deutsch said. Thats who we are.

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