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JPMorgan Active Small Cap Value ETF JPSV

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Morningstar’s Analysis JPSV

Medalist rating as of .

A strong management team and sound investment process underpin JPMorgan Active Small Cap Value ETF's 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.

A strong management team and sound investment process underpin JPMorgan Active Small Cap Value ETF's Morningstar Medalist Rating of Silver.

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Morningstar Manager Research

Summary

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

The strategy’s management team earns an Above Average People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in liquidity exposure and has 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'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 index on a risk-adjusted basis over the long term.

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Morningstar Manager Research

Process

Above Average

Jpmorgan Active Small Cap Value ETF earns an Above Average 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. The parent firm's five-year risk-adjusted success ratio of 55% also influences the rating. The measure indicates the percentage of a firm's funds that survived and outperformed 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. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

This strategy has tended to hold more growth stocks than others in the Small Value Morningstar Category. But in terms of market capitalization, it is on par with peers. Analyzing additional factors, this strategy continually held some stocks with low trading volume over the last few years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In the latest month, the strategy was also less exposed to the Liquidity factor compared with Morningstar Category peers. This strategy also has tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity, during these years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. In recent months, the strategy also had less Volatility factor exposure than its 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 real estate by 2.8 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are consumer cyclical and technology, with consumer cyclical underweighting the average portfolio by 4.4 percentage points of assets and technology similar to the average. The portfolio is positioned across 120 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 14.8% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category’s 29.9% average. And in closing, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

Rated on Published on

Jpmorgan Active Small Cap Value ETF earns an Above Average People Pillar rating.

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Morningstar Manager Research

People

Above Average

Lawrence E. Playford, the longest-tenured manager on the strategy, provides strong guidance, bringing forward over 25 years of listed portfolio management experience. Lawrence E. Playford has an experienced backdrop of support. The three listed managers boast 11 years of average listed portfolio management experience. The management team is invested in the fund, but the maximum investment by any manager is between$ 100,000 and$ 500,000. An investment of more than$ 1 million would be ideal to align managers' interests with those of the fund's investors.

Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

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 strategy began on March 7, 2023, and has displayed mixed initial performance.

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Morningstar Manager Research

Performance

However, its track record is too short to draw a meaningful conclusion. In the past twelve months, this share class has returned 22.2%, compared with the 21.8% return of the category benchmark, the Russell 2000 Value Index, for the same period. But during that time, it trailed the category average's 24.1% return for the period.

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It is imperative to evaluate fees, which compound over time and diminish returns.

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Morningstar Manager Research

Price

This share class sits in the cheapest quintile of its Morningstar Category. Its attractive expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class should be able to deliver positive alpha versus its category benchmark, explaining its Morningstar Medalist Rating of Silver.

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Portfolio Holdings JPSV

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 14.5
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

JPMorgan US Government MMkt Morgan

2.05 278,751
Cash and Equivalents

Selective Insurance Group Inc

2.01 273,015
Financial Services

Encompass Health Corp

1.87 253,814
Healthcare

Chord Energy Corp Ordinary Shares - New

1.40 190,231
Energy

Matador Resources Co

1.38 187,304
Energy

Primo Water Corp

1.34 182,713
Consumer Defensive

Independent Bank Corp (Ionia MI)

1.34 181,710
Financial Services

H.B. Fuller Co

1.32 179,884
Basic Materials

TTM Technologies Inc

1.30 177,128
Technology

SouthState Corp

1.26 171,396
Financial Services