JPMorgan International Hedged Equity Laddered Overlay ETF HOLA

JPMorgan International Hedged Equity Laddered Overlay ETF offers a low-volatility portfolio of international stocks that can help investors stay the course in volatile markets. Consistent implementation by an experienced team and reasonable fees add to its strengths.

The strategy cushions downside loss by foregoing some upside returns. It achieves this objective by layering MSCI EAFE Index options on top of an equity portfolio that closely hugs the index. To offer downside protection, the managers buy put options with strike prices 5% below the MSCI EAFE’s market value. They pay for part of that purchase with proceeds from selling put options 20% out of the money. This structure should generally protect the fund from losses between 5% and 20%. If markets fall less than 5%, the fund should closely track the MSCI EAFE. If the index falls more than 20%, the fund will begin participating in losses once again, maintaining a roughly 15 percentage points advantage over the index. To cover the remaining cost of the put purchase, the managers sell out-of-the-money call options, which limits the strategy’s upside. The call option’s strike price moves dynamically based on market conditions, averaging between 3.5% and 5.5% above the index value historically. The fund loses out on index gains beyond this threshold.

In July 2025, the strategy for managing the options overlay switched from a quarterly reset schedule to a ladder of monthly options trades and converted from a mutual fund into an exchange-traded fund. Instead of rolling all its options quarterly, the fund now rolls a third of its options each month. This reduces the impact of market timing on its options trades, and investors can expect the ETF to perform similarly to its predecessor.

Hamilton Reiner runs the show here. The lead manager and architect of the strategy joined JPMorgan in 2009 and has more than three decades of equity and options trading experience. He is supported by comanager Piera Elisa Grassi and a deep bench of equity analysts who implement the low-tracking-error equity portfolio the options are built around.

The options overlay has effectively cut risk for this strategy. The fund only lost 5.3% in the second quarter of 2022, outpacing the MSCI EAFE Index by over 9 percentage points during that time. Strong downside protection comes at the cost of lost upside, but the fund has still provided robust returns. From its 2019 inception through September 2025, the institutional share class returned 6% compared with the MSCI EAFE Index’s 9% return with 40% lower volatility. This is a decent option for investors seeking to manage risk in global markets.

Disciplined execution of a thoughtful process has given investors consistent outcomes that they can count on. The fund earns an Above Average Process Pillar rating.

The fund’s option overlay narrows potential outcomes and provides a smoother path to equity returns. On top of an equity portfolio that resembles the MSCI EAFE Index, the fund overlays three-month index options that limit downside at the expense of upside. The team purchases 5% out-of-the-money put options and sells 20% out-of-the-money put options on the MSCI EAFE Index. This structure, called a put spread, protects against losses from negative 5% to negative 20% during the options’ three-month duration. The put spread is cheaper than buying the 5% out-of-the-money put outright, but it saddles investors with losses beyond 20%.

The manager also sells out-of-the-money call options to cover the price of the put spread so that the full options sleeve does not incur a cost. The strike prices on the call options average around 3.5%-5.5% above the index value, depending on the net cost of the put spread. This determines the strategy’s upside cap. High volatility and interest rates increase options prices, which allows the strategy to target higher call strike prices and increases the fund’s upside.

The team generally rolls a third of its options every month as they approach expiration, though the managers retain some trading discretion.

The equity sleeve aims to generate a small level of alpha in the equity portfolio by slightly overweighting attractively priced stocks and underweighting expensive stocks based on fundamental analysis. Since the equity portfolio closely resembles the MSCI EAFE Index, the index options remain a representative hedge.

The strategy’s equity portfolio should track the MSCI EAFE Index closely as it targets a 2% annual tracking error. Individual stock exposure can only deviate up to 75 basis points from the index. JPMorgan equity analysts forecast earnings for each eligible stock, incorporating company-specific growth catalysts. The equity sleeve leverages these forecasts to offer marginal improvement over the MSCI EAFE Index within its constraints. The resulting portfolio is well-diversified with around 200 stocks. Its sector weightings typically resemble those of the MSCI EAFE within a percentage point deviation.

Call options fetch a higher premium when volatility and interest rates are higher, which increases the strategy’s upside. The highest cap the fund has experienced was 8% out of the money in late 2022 and early 2023. Likewise, it still managed to write calls over 2% out of the money when interest rates and volatility were at their lowest. In periods of serious market stress where the index drops more than 20%, its short out-of-the-money put will expose the fund to additional losses. Nonetheless, it still cushions against losses in down markets.

Considerable experience and strong support from JPMorgan’s vast resources earn this management team an Above Average People Pillar rating.

Industry veterans head up the small team managing this strategy. Lead portfolio manager and strategy architect Hamilton Reiner joined the firm in 2009 and has three decades of experience in derivatives markets. His recent promotion to the chief investment officer of the US Core Equity team adds supervisory responsibilities, but this should not affect the strategy’s systematic process. Newly named managers Matt Bensen and Judy Jansen round out the team. Both have been running the options sleeve alongside Reiner in the background and act as his backups. The managers also leverage a deep bench of operational resources and the institutional risk framework at JPMorgan.

Piera Elisa Grassi leads the equity sleeve. Grassi draws on JPMorgan's broad team of global equity analysts, who average about two decades of industry experience, for this equity sleeve and JPMorgan’s Global and International Research Enhanced Index strategies.

J.P. Morgan continues to build a track record of strong stewardship, supporting a Parent rating upgrade to High from Above Average.

With more than USD 4 trillion in assets under management (including USD 1.3 trillion in money market funds) and a broad reach, J.P. Morgan is among the largest active asset managers in the US, Europe, and Asia. Although some multi-asset offerings have struggled over the past five years, prompting new leadership to make changes to investment teams, its equity and fixed-income teams boast long-tenured portfolio managers who practice repeatable investment processes that have generally produced strong long-term results. Most of its funds are core building blocks with long lifetimes, though its lineup around the world also includes more-specialized options: Two options-based equity-income exchange-traded funds, launched in 2020 and 2022, are now among the firm’s largest. J.P. Morgan has been an early mover in offering active ETFs, having converted 12 of its open-end mutual funds to the structure and launching others. It isn’t always at the forefront of emerging trends. While it has filed registration statements with the Securities and Exchange Commission for an interval fund and an ETF investing in private markets, it hasn’t yet introduced such an option for all investors, whether on its own or in partnership with another asset manager, unlike some of its closest competitors.

To support the firm’s diverse investment offerings, J.P. Morgan has invested heavily in both portfolio management tools and its client organization. Over the past 10 years, the firm has developed robust proprietary technology with advanced analytics and broad buy-in from investment analysts, portfolio traders, and portfolio managers, all of whom have easy access to the platform. The firm also stands apart for its demonstrated commitment to clients. In the early 2000s, J.P. Morgan began pivoting its engagement with financial advisors to adopt a more consultative approach, supported by its sought-after Guide to the Markets research series that focuses on investor education, not product pitches. This perspective can help clients stay the course, supporting positive investor outcomes.

Incentives reinforce alignment with fundholders. Beginning more than 10 years ago, investment team compensation is tied to three-, five-, and 10-year performance, and portfolio managers must invest at least half of their deferred compensation in J.P. Morgan strategies. Many firms encourage portfolio managers to invest alongside fundholders, but J.P. Morgan goes a step further in requiring client-facing individuals to invest substantial portions of their incentive compensation in the funds.

Although some funds still face high cost hurdles, more than half of share classes charge competitive fees relative to peers.

This fund sits in the equity-hedged Morningstar Category, which mostly includes US-centric portfolios. International stocks have outperformed US companies recently, resulting in an 8-percentage-point advantage for the fund over its average category peer during the first nine months of 2025. But this wasn’t enough to overcome years of lagging international stocks’ returns. The institutional share class trailed the category average by over 2 percentage points from its 2019 inception through September 2025. Nonetheless, this fund still provided downside protection for investors looking for smoother returns in international stocks.

This strategy shines relative to its underlying index when markets perform poorly. It outpaced the MSCI EAFE Index by 2.6 percentage points in the last quarter of 2024, maintaining its 5% downside hedge while the index lost 8%. Its max drawdown during March 2020, the worst shock since its inception, was 15 percentage points shallower than MSCI EAFE. From its 2019 inception through September 2025, the fund’s 10% standard deviation of monthly returns stood out against the index’s 17%.

Prioritizing downside over upside does not mean the fund completely missed out on recent market rallies. It captured over 60% of the MSCI EAFE Index’s upside over the past five years and limited downside capture to a similar extent.

Investors should be aware that intra-period returns can vary from the stated downside hedge. Buying in after the options trade was initiated could lead to different caps and buffers. And intra-period performance differs from options outcomes at expiration. Stated upside caps and downside protection only apply to the full lifecycle of the options trade.

JPMorgan Intl Hdg Eq Ldrd Overlay ETF's Prospectus Adjusted Expense Ratio is 0.5% per year. It places it in the cheapest quintile of the Morningstar US Fund Equity Hedged Category, where the median fee is 1% per year. This cost positioning translates into a Medalist Rating Price Score of 1.67, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.