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JPMorgan Carbon Transition US Eq ETF JCTR

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Morningstar’s Analysis JCTR

Medalist rating as of .

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

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Morningstar Manager Research

Summary

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

The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. 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.

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Morningstar Manager Research

Process

High

JPMorgan Carbon Transition US Eq ETF earns a High Process Pillar rating.

The most significant contributor to 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 bolsters 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 respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, influences 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 JPMorgan Asset Management Carbon Transition U.S. Equity Index. The fund will invest at least 80% of its assets in securities included in index. The index is designed to capture the performance of companies which have been identified through its rules-based process as better positioned to benefit from a transition to a lower carbon economy while also providing broader U.S. market exposure.

The portfolio is overweight in technology by 4.2 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and consumer defensive; however, the allocations are similar to the category. The strategy owns 411 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 29.9% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category average's 50.3%. And in closing, in terms of portfolio turnover, on a year-over-year basis, 20% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

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.

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Morningstar Manager Research

People

Average

There are three managers listed on the fund: Yazann Romahi, Natalia Zvereva, Aijaz Hussain. Though they do not manage other products together, managers may manage them individually.

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 a strong short-term track record.

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Morningstar Manager Research

Performance

Over the past year, it beat the category index, the Russell 1000 Index, by an annualized 1.4 percentage points, and outperformed the category average by 5.0 percentage points. And more importantly, when looking across a longer horizon, the strategy came out ahead. On a three-year basis, it outperformed the index by an annualized 1.5 percentage points.

The risk-adjusted performance only continues to make a case for this fund. The share class had a higher Sharpe ratio, a measure of risk-adjusted return, than the index over the trailing three-year period. Often, higher returns are associated with more risk. However, this strategy stayed in line with the benchmark's standard deviation. Finally, the share class proved itself effective by generating positive alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

Published on

Fees are one of the most predictive factors of future performance.

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Morningstar Manager Research

Price

This fund lands in the cheapest quintile of its Morningstar Category. Its low fee, paired with the fund’s People, Process, and Parent Pillars, suggests that this share class has high potential to deliver positive alpha compared with 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 JCTR

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 30.7
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

Microsoft Corp

6.31 325,984
Technology

Apple Inc

6.03 311,567
Technology

NVIDIA Corp

4.47 230,594
Technology

Amazon.com Inc

3.14 162,260
Consumer Cyclical

Alphabet Inc Class A

3.09 159,573
Communication Services

Meta Platforms Inc Class A

2.03 104,716
Communication Services

Eli Lilly and Co

1.73 89,505
Healthcare

Tesla Inc

1.40 72,502
Consumer Cyclical

Visa Inc Class A

1.26 65,129
Financial Services

UnitedHealth Group Inc

1.24 64,178
Healthcare