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Should JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) Be on Your Investing Radar?

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If you're interested in broad exposure to the Mid Cap Blend segment of the US equity market, look no further than the JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME - Free Report) , a passively managed exchange traded fund launched on 05/11/2016.

The fund is sponsored by J.P. Morgan. It has amassed assets over $232.28 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. Thus they have a nice balance of growth potential and stability.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.24%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.29%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 14.60% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Coterra Energy Inc (CTRA - Free Report) accounts for about 0.93% of total assets, followed by Marathon Oil Corp Common (MRO - Free Report) and Devon Energy Corp Common (DVN - Free Report) .

The top 10 holdings account for about 5.41% of total assets under management.

Performance and Risk

JPME seeks to match the performance of the Russell Midcap Diversified Factor Index before fees and expenses. 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.

The ETF has added roughly 26.46% so far this year and it's up approximately 27.56% in the last one year (as of 12/14/2021). In the past 52-week period, it has traded between $74.12 and $95.38.

The ETF has a beta of 1.06 and standard deviation of 23.33% for the trailing three-year period. With about 365 holdings, it effectively diversifies company-specific risk.

Alternatives

JPMorgan Diversified Return U.S. Mid Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JPME is a reasonable option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard MidCap ETF (VO - Free Report) and the iShares Core S&P MidCap ETF (IJH - Free Report) track a similar index. While Vanguard MidCap ETF has $54.49 billion in assets, iShares Core S&P MidCap ETF has $65.47 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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