JPMorgan BetaBuilders US Sml Cp Eq ETF earns a High Process Pillar rating.
The leading factor in the rating is its parent firm's excellent 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, such as 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% contributes to the process. The measure indicates the percentage of a firm's funds that survived and surpassed their respective category's median Morningstar Risk-Adjusted Return for the period. Their relatively high 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 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 2.9 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 828 holdings and its assets are more dispersed than peers in the category. In particular, 5.1% of the fund’s assets are concentrated in the top 10 fund holdings, compared to the category’s 25.8% average. And finally, 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.