JPMorgan Equity Focus ETF JPEF

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

The strategy merits an Average Process Pillar rating. 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, Process 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.

Stock selection looms large for this focused portfolio. It is an amalgamation of the highest-conviction picks by Jonathan Simon from his JPMorgan Value Advantage JVAIX portfolio with Tim Parton's top bets from his JPMorgan Growth Advantage JGASX portfolio. (Eytan Shapiro oversees a small slice of assets invested in small caps in the U.K. closed-end vehicle, which can also employ modest leverage.)

Simon applies a mild value style, preferring attractively priced quality stocks combined with some opportunistic positions. Parton targets companies with quality franchises and strong market positions and typically builds a high-growth portfolio. Each sleeve can hold only 10–20 stocks. The managers run their sleeves autonomously but have regular discussions about the overall portfolio and its exposures. The value and growth allocations are driven by bottom-up convictions and are typically balanced but can move in a 40%–60% range. They can allocate capital to one another when they lack strong convictions or when they’d like to rebalance the overall portfolio.

Although the formula has worked well for Parton and Simon, who’ve known each other for decades and are highly experienced investors, it may not be as natural for incoming manager Felise Agranoff and potentially Dan Percella down the road. Both managers lack substantial large-cap investing experience and time working with each other. A concentrated framework only raises the stakes, making the process difficult to embrace at this time.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point) Morningstar maps the covered vehicle’s Process Pillar to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning Process Pillar ratings to vehicles that follow the same strategy.

Two new faces became named comanagers in 2022. Felise Agranoff and Dan Percella joined veteran managers Jonathan Simon and Tim Parton and figure to represent the future for this offering. Agranoff will succeed Parton, who will retire in early 2024. She is a logical successor in that she has worked alongside Parton for over a decade as both an analyst and comanager on JPMorgan Mid Cap Growth HLGEX and JPMorgan Growth Advantage VHIAX. However, she doesn’t have much experience investing in large-cap stocks nor does she have a stand-alone track record. Retirement isn’t imminent for Simon, but the thought of a future without him isn’t far away either, as he has worked at J.P Morgan for over 40 years. However, to plan ahead, the firm named Percella as comanager in 2022, and he’ll likely succeed him when the time comes. Similar to Agranoff, Percella has a history in smid-cap stocks but not large caps.

Supporting the managers is a deep team of analysts and other portfolio managers whose insights can affect this portfolio. J.P. Morgan’s core/value research team stands over 20-strong and is filled with tenured analysts, about half of which have spent at least a decade with the firm. Dedicated analyst teams on both the growth and value sides are an additional resource.

Note: The People Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point), Morningstar maps the covered vehicle’s People Pillar ratings to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning People Pillar ratings to vehicles that follow the same strategy.

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.

This share class’ quantitatively driven Performance content was not generated because of insufficient data. To generate individualized content, the Medalist Rating quantitative analysis requires sufficient data to generate its framework of “ mental models ” designed to mimic content written by analysts.

Past performance is not predictive of future results, and, therefore, Morningstar Medalist Ratings are not anchored on short-term results and instead focus on long-term risk and return patterns. Performance receives no explicit weighting in Morningstar’s analysis but is referenced as a part of the People, Parent, and Process evaluations.

This share class levies a fee that places it in its Morningstar Category's second-cheapest quintile. Even with this fee, the fund’s People, Process, and Parent Pillars indicate this share class is unlikely to deliver positive alpha relative to its category benchmark, garnering a Morningstar Medalist Rating of Neutral.