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Should JPMorgan BetaBuilders U.S. Small Cap Equity ETF (BBSC) Be on Your Investing Radar?

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Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the JPMorgan BetaBuilders U.S. Small Cap Equity ETF (BBSC - Free Report) , a passively managed exchange traded fund launched on 11/16/2020.

The fund is sponsored by J.P. Morgan. It has amassed assets over $486.67 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

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 0.09%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.49%.

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 Industrials sector--about 16.30% of the portfolio. Financials and Information Technology round out the top three.

Looking at individual holdings, Jpmorgan Us Govt Mmkt Fun accounts for about 1.33% of total assets, followed by Social Capital (SOFI - Free Report) and Zoominfo Technologies (ZI - Free Report) .

The top 10 holdings account for about 5.84% of total assets under management.

Performance and Risk

BBSC seeks to match the performance of the MORNINGSTAR US SML CP TRG MRK EXP EXT ID before fees and expenses. The Morningstar US Small Cap Target Market Exposure Extended Index is a free-float adjusted, market-cap weighted index that targets small cap securities traded in the U.S.

The ETF has lost about -25.32% so far this year and is down about -23.18% in the last one year (as of 06/21/2022). In the past 52-week period, it has traded between $49.03 and $71.50.

The ETF has a beta of 0.88 and standard deviation of 23.92% for the trailing three-year period. With about 902 holdings, it effectively diversifies company-specific risk.

Alternatives

JPMorgan BetaBuilders U.S. Small 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, BBSC is a sufficient option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard SmallCap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.31 billion in assets, Vanguard SmallCap Value ETF has $21.40 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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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