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Is JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) a Strong ETF Right Now?
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Launched on 05/11/2016, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by J.P. Morgan. JPME has been able to amass assets over $228.17 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Russell Midcap Diversified Factor Index.
The Russell Midcap Diversified Factor Index comprises of mid cap US equity securities selected from the Russell Midcap Index. The Index is diversified across the following sectors: financials, technology, consumer services, health care, industrials, consumer goods, energy/ materials and telecommunication/utilities.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.24% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.73%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
JPME's heaviest allocation is in the Consumer Discretionary sector, which is about 15.10% of the portfolio. Its Healthcare and Information Technology round out the top three.
Taking into account individual holdings, Teradyne Inc Common (TER - Free Report) accounts for about 0.50% of the fund's total assets, followed by Resmed Inc Common Stock (RMD - Free Report) and Best Buy Co Inc Common (BBY - Free Report) .
JPME's top 10 holdings account for about 4.59% of its total assets under management.
Performance and Risk
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has lost about -4.31% so far, and is up about 4.76% over the last 12 months (as of 09/03/2020). JPME has traded between $42.43 and $71.93 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 22.37% for the trailing three-year period. With about 419 holdings, it effectively diversifies company-specific risk.
Alternatives
JPMorgan Diversified Return U.S. Mid Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core SP MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $35.98 billion in assets, iShares Core SP MidCap ETF has $46.23 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) a Strong ETF Right Now?
Launched on 05/11/2016, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by J.P. Morgan. JPME has been able to amass assets over $228.17 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Russell Midcap Diversified Factor Index.
The Russell Midcap Diversified Factor Index comprises of mid cap US equity securities selected from the Russell Midcap Index. The Index is diversified across the following sectors: financials, technology, consumer services, health care, industrials, consumer goods, energy/ materials and telecommunication/utilities.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.24% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.73%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
JPME's heaviest allocation is in the Consumer Discretionary sector, which is about 15.10% of the portfolio. Its Healthcare and Information Technology round out the top three.
Taking into account individual holdings, Teradyne Inc Common (TER - Free Report) accounts for about 0.50% of the fund's total assets, followed by Resmed Inc Common Stock (RMD - Free Report) and Best Buy Co Inc Common (BBY - Free Report) .
JPME's top 10 holdings account for about 4.59% of its total assets under management.
Performance and Risk
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has lost about -4.31% so far, and is up about 4.76% over the last 12 months (as of 09/03/2020). JPME has traded between $42.43 and $71.93 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 22.37% for the trailing three-year period. With about 419 holdings, it effectively diversifies company-specific risk.
Alternatives
JPMorgan Diversified Return U.S. Mid Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard MidCap ETF (VO - Free Report) tracks CRSP US Mid Cap Index and the iShares Core SP MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $35.98 billion in assets, iShares Core SP MidCap ETF has $46.23 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.