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JPMorgan Climate Change Solutions ETF TEMP

Medalist Rating as of | See JPMorgan Investment Hub
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Morningstar’s Analysis TEMP

Medalist rating as of .

A strong management team and sound investment process underpin JPMorgan Climate Change Solutions 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 Climate Change Solutions ETF's Morningstar Medalist Rating of Silver.

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Morningstar Manager Research

Summary

The portfolio maintains a 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 sensible investment philosophy earns an Above Average Process Pillar rating. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. 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.

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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 Climate Change Solutions ETF earns an Above Average Process Pillar rating.

The most important driver of the rating is the parent firm's five-year risk-adjusted success ratio of 57%. 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. The stability of talent across its parent firm also supports the process. The firm's asset-weighted manager tenure of 16 years demonstrates its ability to retain portfolio managers. Lastly, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

This strategy skews toward smaller, deeper value companies than its average peer in the Global Large-Stock Growth Morningstar Category. Examining additional factor exposure, this fund has constantly tilted toward stocks with higher trading volumes than its Morningstar Category Peers over the past few years. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. This orientation tends to pay off most prominently when markets are hot. In recent months, however, the strategy had less Volatility factor exposure over 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 industrials and utilities relative to the category average by 43.2 and 13.2 percentage points, respectively. The sectors with low exposure compared to category peers are healthcare and technology, underweight the average by 15.7 and 14.2 percentage points of assets, respectively. The portfolio is positioned across 69 holdings and is relatively top-heavy. Of the strategy's assets, 38.8% are concentrated within the top 10 holdings, as opposed to the typical peer's 31.4%. And in closing, in terms of portfolio turnover, this portfolio's holdings turn over more often than comparable products in its peer group, possibly resulting in higher costs for investors and a drag on performance.

Rated on Published on

JPMorgan Climate Change Solutions ETF earns an Above Average People Pillar rating.

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Morningstar Manager Research

People

Above Average

The team is backed by Francesco Conte, the longest-tenured manager on the strategy, who provides over 25 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.4 stars, reflecting below-average risk-adjusted performance in comparison to category peers. Francesco Conte is supported by an experienced team, being able to draw on three additional listed managers, who average 17 years of listed portfolio management experience. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy'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

Since its inception in December 2021, this share class has performed poorly.

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Morningstar Manager Research

Performance

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 6.7%, compared with the-2.5% return of the category index, the MSCI ACWI Growth Index, for the same period. It also trailed peers as the category’s average loss for the period was 4.6%. The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing one-year period.

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Fees compound over time and diminish returns, making it critical for investors to minimize expenses.

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Morningstar Manager Research

Price

This share class lands in the cheapest quintile of its Morningstar Category. Its affordable fee, paired with the fund’s People, Process, and Parent Pillars, indicates that this share class is well-positioned to generate positive alpha relative to its category benchmark, explaining its Morningstar Medalist Rating of Silver.

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Portfolio Holdings TEMP

  • Current Portfolio Date
  • Equity Holdings 61
  • Bond Holdings 0
  • Other Holdings 8
  • % Assets in Top 10 Holdings 39.6
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector
5.00
1,129,360
Industrials
4.49
1,013,001
Industrials
4.30
970,995
Utilities
4.29
968,735
Industrials
4.22
953,297
Industrials
3.66
826,360
Industrials
3.64
820,492
Industrials
3.43
773,816
Technology
3.20
721,157
Technology
3.06
690,022
Industrials