JPMorgan International Growth ETF JIG

An incline in its Process Pillar rating is the primary driver of JPMorgan International Growth ETF's upgrade to a Morningstar Quantitative Rating of Bronze from Neutral. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.

The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in liquidity exposure and an overweight in quality exposure compared with category peers. Low liquidity risk exposure is attributed to stocks with a low trading volume, limiting managers' flexibility. And a high quality exposure is rooted in holding stocks that are consistently profitable, growing, and have solid balance sheets. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a high lineup success ratio and overall low fees. Finally, this management team has a wealth of experience, but still gets an Average People Pillar rating.

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. JPMorgan International Growth ETF earns an Above Average Process Pillar rating.

This strategy skews toward larger, growthier companies than its average peer in the Foreign Large Growth Morningstar Category. Looking at additional factor exposure, this strategy holds some stocks with low trading volume. Illiquid stocks tend to be more difficult and costly to sell quickly during market stress, which could affect returns if rapid redemptions, for example, force managers to sell at disadvantageous prices. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. This strategy also has a defensive tilt, with exposure to high-quality stocks. This means that the fund holds companies that are profitable, growing, and have solid balance sheets. This orientation should contribute to its weathering downturns better than its Morningstar Category peers. And compared with category peers, the strategy historically has had more exposure. Additionally, the portfolio has tended to underweight yield, as shown in its low exposure to companies that pay dividends or buy back shares. Dividend-paying stocks offer steady income payments, but sometimes cut payouts when earnings fall. The portfolio has less exposure than its Morningstar Category peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in healthcare and technology relative to the average peer in its category by 4.8 and 4.0 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are consumer cyclical and financial services, underweight the average by 4.2 and 3.1 percentage points of assets, respectively. The portfolio is positioned across 67 holdings and is relatively top-heavy. Of the strategy's assets, 34.2% are concentrated within the top 10 holdings, compared to the typical peer's 15.7%.

Despite its managers' lack of personal investment, JPMorgan International Growth ETF benefits from a seasoned corps of managers. Together, this earns the team an Average People Pillar rating. Thomas Murray’s veteran status, with over 25 years of portfolio management experience, imprints a positive mark on the strategy as it brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 2.8 stars, demonstrating, in aggregate, that they provide middling value for investors. Thomas Murray has an experienced listed co-manager. Together, they average over 25 years of portfolio management experience. As a team, they manage five investment vehicles together, with a Silver asset-weighted average combined Morningstar Analyst and Quantitative Rating, indicating the potential to deliver positive alpha in aggregate. None of the managers here invests any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

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

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various cohorts globally and a diverse set of 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.

Since its inception in May 2020, this share class has performed poorly. However, with such a short track record, it is too early to draw conclusions from their performance.. In the last two years, this share class has lost 9.7%, compared with the category index's, MSCI ACWI ex USA Growth Index’s, -7.0% return for the same period. It also fell short of peers as the category’s average loss for the period was 6.4%. The share class failed to beat the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing one-year period.

By minimizing expenses, investors can maximize their expected returns. This share class sits in the cheapest quintile of its Morningstar Category. Its low expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class is well-positioned to generate positive alpha compared with its category benchmark, leading to its Morningstar Quantitative Rating of Bronze.