JPMorgan BetaBuilders Japan ETF earns a High Process Pillar rating.
The most notable contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 57% also contributes to the process. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. The parent firm's superior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, supports the rating as well.
The investment strategy as stated in the fund's prospectus is:
The investment seeks investment results that closely correspond, before fees and expenses, and to the performance of the Morningstar® Japan Target Market Exposure IndexSM. The fund will invest at least 80% of its assets in securities included in the underlying index. The underlying index is a free float adjusted market capitalization weighted index which consists of stocks traded primarily on the Tokyo Stock Exchange or the Nagoya Stock Exchange. The fund may invest up to 20% of its assets in exchange-traded futures and forward foreign currency contracts to seek performance that corresponds to the underlying index.
The portfolio has allocations in its top two sectors, healthcare and communication services, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and consumer defensive, with basic materials underweighting the average portfolio by 3.1 percentage points of assets and consumer defensive similar to the average. The portfolio is positioned across 252 holdings and is quite concentrated. In particular, 26.4% of the strategy's assets are housed within the top 10 holdings, compared to the category average of 21.9%. And finally, in terms of portfolio turnover, on a year-over-year basis, 3% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.