JPMorgan Global Select Equity ETF JGLO

The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.

The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in momentum exposure and quality exposure compared with category peers. Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. The management team's considerable industry experience earns it an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Jpmorgan Global Select Equity ETF earns an Above Average Process Pillar rating.

The leading factor in the rating is the fund's excellent long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 57% also supports the rating. 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 compelling success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the number of months that the management team has been running this vehicle together.

This strategy skews toward larger, higher-growth companies than its average peer in the Global Large-Stock Blend Morningstar Category. Analyzing additional factors, this strategy has consistently had exposure to high-momentum stocks compared with Morningstar Category peers over the past few years. Momentum approaches bet that rising stocks will continue to rise and that lagging stocks will continue to lag. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity, during these years. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, the portfolio has tended to underweight yield, as shown in its lower exposure to companies that pay dividends or buy back shares than peers over these years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In recent months, the strategy also had less Yield factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in technology and consumer cyclical relative to the category average by 7.3 and 3.4 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and communication services, underweight the average by 7.2 and 3.9 percentage points of assets, respectively. The portfolio is positioned across 79 holdings and is quite concentrated. In particular, 39.9% of the strategy's assets are housed within the top 10 holdings, compared to the category’s 27.6% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 28% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

The main contributor to the rating is its parent firm's five-year success ratio of 57%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median return for the period. The combined average five-year excess return of each manager also influences the rating. It indicates that the funds they manage have outperformed the average manager. Lastly, the rating is limited because none of the managers have over$ 1 million invested in the fund, which would align their interests with fundholders.

Helge Skibeli, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 19 years of listed portfolio management experience. Despite having a small team, the two listed managers boast 13 years of listed portfolio management experience.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse asset classes, the firm has more tightly integrated its capabilities in recent years, notably through the development of proprietary analytical and risk systems. Investment teams are robustly staffed and helmed by seasoned contributors. The firm’s strategies tend to produce reliable portfolios, and several flagship offerings are Morningstar Medalists. Manager incentives align with fundholders'; compensation reflects longer-term performance factors, and portfolio managers invest in the firm’s strategies as part of their compensation plans.

The firm’s funds tend to be well-priced, but they aren’t as competitive as many highly regarded peers of similar scale. Recent product launches include thematic and single-country strategies, both of which carry the potential for volatile performance and flows, along with misuse by investors. The firm remains intrepid when it comes to developing an environmental, social, and governance-focused framework and continues to move into other areas such as direct indexing through its 55iP acquisition and China through its joint venture, but these complicated initiatives take time to assess any real and lasting effect.

That said, it is too early to have a strong opinion on its prospects. In the past seven months, this share class has returned 20.2%, compared with the 16.2% return of the category benchmark, the MSCI ACWI Index, for the same period. During that time, it also outperformed the category average's 14.0% return for the period.

Thus, assessing cost is a critical step in any investment evaluation. This share class lands in the cheapest quintile of its Morningstar Category. Its low fee, taken together with the fund’s People, Process, and Parent Pillars, suggests that this share class has high potential to deliver positive alpha relative to its category benchmark, explaining its Morningstar Medalist Rating of Silver.