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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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $249.53 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. JPME seeks to match the performance of the Russell Midcap Diversified Factor Index before fees and expenses.
The JP Morgan Diversified Factor US Mid Cap Equity Index utilizes a rules-based approach that combines risk-based portfolio construction with multi-factor security selection, including value, quality and momentum factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.24%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
JPME's heaviest allocation is in the Information Technology sector, which is about 13.80% of the portfolio. Its Industrials and Healthcare round out the top three.
When you look at individual holdings, Enphase Energy Inc (ENPH - Free Report) accounts for about 0.58% of the fund's total assets, followed by Arthur J Gallagher & Co (AJG - Free Report) and Quanta Services Inc (PWR - Free Report) .
Its top 10 holdings account for approximately 4.7% of JPME's total assets under management.
Performance and Risk
The ETF has lost about -16.83% so far this year and is down about -10.81% in the last one year (as of 10/10/2022). In the past 52-week period, it has traded between $76.41 and $95.75.
The fund has a beta of 1.03 and standard deviation of 24.74% for the trailing three-year period. With about 378 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 S&P MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $45.94 billion in assets, iShares Core S&P MidCap ETF has $56.67 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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $249.53 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. JPME seeks to match the performance of the Russell Midcap Diversified Factor Index before fees and expenses.
The JP Morgan Diversified Factor US Mid Cap Equity Index utilizes a rules-based approach that combines risk-based portfolio construction with multi-factor security selection, including value, quality and momentum factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.24%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
JPME's heaviest allocation is in the Information Technology sector, which is about 13.80% of the portfolio. Its Industrials and Healthcare round out the top three.
When you look at individual holdings, Enphase Energy Inc (ENPH - Free Report) accounts for about 0.58% of the fund's total assets, followed by Arthur J Gallagher & Co (AJG - Free Report) and Quanta Services Inc (PWR - Free Report) .
Its top 10 holdings account for approximately 4.7% of JPME's total assets under management.
Performance and Risk
The ETF has lost about -16.83% so far this year and is down about -10.81% in the last one year (as of 10/10/2022). In the past 52-week period, it has traded between $76.41 and $95.75.
The fund has a beta of 1.03 and standard deviation of 24.74% for the trailing three-year period. With about 378 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 S&P MidCap ETF (IJH - Free Report) tracks S&P MidCap 400 Index. Vanguard MidCap ETF has $45.94 billion in assets, iShares Core S&P MidCap ETF has $56.67 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.