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Is JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) a Strong ETF Right Now?
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The JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME - Free Report) was launched on 05/11/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by J.P. Morgan, and has been able to amass over $243.77 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.24% for JPME, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 12.40% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Materials and Healthcare round out the top three.
Taking into account individual holdings, Coterra Energy Inc (CTRA - Free Report) accounts for about 0.93% of the fund's 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
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has lost about -1.09% so far, and is up roughly 14.69% over the last 12 months (as of 03/29/2022). JPME has traded between $82.62 and $95.75 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 23.39% 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 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 $54.64 billion in assets, iShares Core S&P MidCap ETF has $66.59 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?
The JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME - Free Report) was launched on 05/11/2016, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by J.P. Morgan, and has been able to amass over $243.77 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.24% for JPME, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 12.40% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Materials and Healthcare round out the top three.
Taking into account individual holdings, Coterra Energy Inc (CTRA - Free Report) accounts for about 0.93% of the fund's 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
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has lost about -1.09% so far, and is up roughly 14.69% over the last 12 months (as of 03/29/2022). JPME has traded between $82.62 and $95.75 in this past 52-week period.
The ETF has a beta of 1.05 and standard deviation of 23.39% 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 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 $54.64 billion in assets, iShares Core S&P MidCap ETF has $66.59 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.