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. JPMorgan US Momentum Factor ETF earns a High Process Pillar rating.
This strategy skews toward smaller, deeper value companies compared with its average peer in the Large Growth Morningstar Category. Examining additional factor exposure, the fund holds stocks with high trading volumes, which can act as buoys in market turbulence and are usually easier to buy and sell in most market environments. The strategy is also historically more exposed compared with Morningstar Category peers. This strategy also tilts in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. But when compared with category peers, the strategy historically has had less exposure. Additionally, this strategy has demonstrated a bias to high-momentum stocks. Momentum is based on the premise that market outperformers will continue to outperform, and the laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. And the portfolio has more 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 industrials and energy relative to the average peer in its category by 4.9 and 3.6 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are communication services and technology, underweight the average by 6.5 and 5.5 percentage points of assets, respectively. The portfolio is positioned across 289 holdings and assets are more dispersed than peers in the category. In particular, 16.6% of the strategy's assets are concentrated in the top 10 fund holdings, as opposed to the typical peer's 48.0%.