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JPMorgan BetaBuilders US Mid Cap Eq ETF BBMC

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Morningstar’s Analysis BBMC

Medalist rating as of .

JPMorgan BetaBuilders US Mid Cap Eq ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver.

Our research team assigns Silver ratings to strategies that they have a high conviction will outperform the relevant index, or most peers, over a market cycle on a risk-adjusted basis.

JPMorgan BetaBuilders US Mid Cap Eq ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver.

null Morningstar Manager Research

Morningstar Manager Research

Summary

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

The strategy's sensible investment philosophy merits a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in liquidity exposure and an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Rated on Published on

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term.

null Morningstar Manager Research

Morningstar Manager Research

Process

High

JPMorgan BetaBuilders US Mid Cap Eq ETF earns a High Process Pillar rating.

The most significant contributor to the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. This fund tracks an index, which also increases its process rating. Historical data, like Morningstar's Active/Passive Barometer, shows 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 55% supports the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their commendable success ratio suggests that this firm does well for investors and that this fund may benefit from that.

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® US Mid Cap Target Market Exposure Extended IndexSM. The fund will invest at least 80% of its assets in securities included in the underlying index. The underlying index consists of equity securities primarily traded in the United States and targets those securities that fall between the 85th and 95th percentiles in market capitalization of the free float adjusted investable universe.

The portfolio has allocations in its top two sectors, consumer cyclical and industrials, that are similar to the category. The sectors with low exposure compared to category peers are financial services and utilities; however, the allocations are similar to the category. The portfolio is positioned across 595 holdings and is less top-heavy than peers. Specifically, 6.7% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the category’s 16.8% average. And in closing, in terms of portfolio turnover, this fund trades more frequently than its average peer, potentially racking up additional expenses for investors and creating a drag on performance.

Rated on Published on

JPMorgan’s team is comparable to peers, resulting in an Average People Pillar rating.

null Morningstar Manager Research

Morningstar Manager Research

People

Average

There are four managers listed on the fund: Alex Hamilton, Oliver Furby, Michael Loeffler, Nicholas D’Eramo. The team is well equipped, with an average of 12 years of portfolio management experience. Together, they manage a total of eight strategies, with a Silver asset-weighted algorithmically-assigned average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate.

Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Rated on Published on

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.

Associate Director Emory Zink

Emory Zink

Associate Director

Parent

Above Average

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.

Rated on Published on

This share class has had varied outcomes, requiring closer analysis.

null Morningstar Manager Research

Morningstar Manager Research

Performance

Over the past two years, it beat the category index, the Russell Midcap Index, by an annualized 42 basis points, but underperformed the category average by 14 basis points. Although more importantly, when widening the time horizon, the strategy fell behind the index. On a four-year basis, it trailed the index by an annualized 50 basis points.

When adjusting for risk, the fund does not hold up. The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing three-year period. This subpar risk-adjusted performance has not resulted in higher volatility, as measured by their standard deviation, which is close to the benchmark. Finally, the share class proved itself ineffective as it was unable to generate alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

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Fees compound over time and reduce returns, making it critical for investors to minimize expenses.

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Morningstar Manager Research

Price

This fund sits in the cheapest quintile of its Morningstar Category. Its attractive fee, paired with the fund’s People, Process, and Parent Pillars, indicates that this share class should be able to deliver positive alpha relative to the lesser of its median category peer or the category benchmark, leading to its Morningstar Medalist Rating of Silver.

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Portfolio Holdings BBMC

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 4.9
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

MicroStrategy Inc Class A

0.65 11.7 Mil
Technology

Carlisle Companies Inc

0.55 9.9 Mil
Industrials

Pure Storage Inc Class A

0.50 9.0 Mil
Technology

Williams-Sonoma Inc

0.49 8.9 Mil
Consumer Cyclical

Reliance Inc

0.48 8.7 Mil
Basic Materials

DraftKings Inc Ordinary Shares - Class A

0.48 8.6 Mil
Consumer Cyclical

EMCOR Group Inc

0.47 8.4 Mil
Industrials

AppLovin Corp Ordinary Shares - Class A

0.46 8.3 Mil
Technology

RPM International Inc

0.40 7.2 Mil
Basic Materials

Jpmorgan Us Govt Mmkt Fund Im Shares (Restricted)

0.40 7.1 Mil
Cash and Equivalents