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JPMorgan BetaBuilders US Sml Cp Eq ETF BBSC

Medalist Rating as of | See JPMorgan Investment Hub
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Morningstar’s Analysis BBSC

Medalist rating as of .

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

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

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

null Morningstar Manager Research

Morningstar Manager Research

Summary

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

The strategy's investment process inspires confidence and earns 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 index on a risk-adjusted basis over the long term.

null Morningstar Manager Research

Morningstar Manager Research

Process

High

JPMorgan BetaBuilders US Sml Cp Eq ETF earns a High Process Pillar rating.

The leading factor in 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 strengthens 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 noteworthy 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 ®US Small Cap Target Market Exposure Extended IndexSM. The fund will invest at least 80% of its assets in securities included in the index and at least 80% of its assets in the securities of small-capitalization companies. The index consists of equity securities primarily traded in the United States and targets those securities that fall between the 95th and 99th percentiles in market capitalization of the free float adjusted investable universe.

The portfolio is overweight in real estate by 3.0 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and basic materials, with industrials underweighting the average portfolio by 2.9 percentage points of assets and basic materials similar to the average. The portfolio is composed of 830 holdings and is diversified among those holdings. In its most recent portfolio, 4.8% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 24.4%. And finally, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

Rated on Published on

JPMorgan’s team is valuable but does not stand out as one of the industry's best, warranting 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, Nicholas D'Eramo, Michael Loeffler. The team is well equipped, with an average of 16 years of portfolio management experience. Together, they manage a total of five 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 inconsistent outcomes, requiring closer analysis.

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Morningstar Manager Research

Performance

Over the past year, it trailed the category index, the Russell 2000 Index, by an annualized 53 basis points, and underperformed its average peer by 1.1 percentage points. Although more importantly, when widening the time horizon, the strategy came out ahead. On a three-year basis, it led the index by an annualized 77 basis points.

However, adjusting for risk unveils the fund in a more complementary light. The share class led the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing three-year period. These strong risk-adjusted results have not come with a bumpier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. However, 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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Returns vary from period to period, but expenses are always deducted.

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Morningstar Manager Research

Price

It is good practice to weigh them heavily in any investment evaluation. This fund is in the cheapest quintile of its Morningstar Category. Its affordable fee, in conjunction with the fund’s People, Process, and Parent Pillars, indicates that this share class has the ability to deliver positive alpha compared with the lesser of its median category peer or the category benchmark, leading to its Morningstar Medalist Rating of Gold.

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Portfolio Holdings BBSC

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 5.4
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

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1.70 8.0 Mil
Cash and Equivalents

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Consumer Cyclical

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Consumer Cyclical

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Industrials

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0.59 2.8 Mil
Healthcare

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Technology

NEXTracker Inc Ordinary Shares - Class A

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Technology

SPX Technologies Inc

0.45 2.1 Mil
Industrials

Equitrans Midstream Corp

0.44 2.1 Mil
Energy

AeroVironment Inc

0.43 2.0 Mil
Industrials