JPMorgan BetaBuilders Japan ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in volatility exposure and liquidity exposure compared with category peers. Low volatility exposure is attributed to stocks with a lower standard deviation of returns. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. 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 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.

Analyst Rating

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 BetaBuilders Japan ETF earns a High Process Pillar rating. The most meaningful contributor to the rating is that this fund tracks an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. The parent firm's five-year risk-adjusted success ratio of 57% also bolsters the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their compelling success ratio suggests that the firm does well for investors and that this fund may benefit from that. The parent firm's strong risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, contributes to the process as well.

The investment strategy as stated in the fund's prospectus is:  The investment seeks investment results that closely correspond, before fees and expenses, and to the performance of the Morningstar® Japan Target Market Exposure IndexSM.  The fund will invest at least 80% of its assets in securities included in the underlying index. The underlying index is a free float adjusted market capitalization weighted index which consists of stocks traded primarily on the Tokyo Stock Exchange or the Nagoya Stock Exchange. The fund may invest up to 20% of its assets in exchange-traded futures and forward foreign currency contracts to seek performance that corresponds to the underlying index. 

 The portfolio has allocations in its top two sectors, healthcare and communication services, that are similar to the category. The sectors with low exposure compared to category peers are basic materials and consumer defensive, with basic materials underweighting the average portfolio by 3.6 percentage points of assets and consumer defensive similar to the average. The strategy owns 253 securities and is relatively top-heavy. Of the strategy's assets, 26.3% are concentrated within the top 10 holdings, as opposed to the category’s 21.3% average. And finally, in terms of portfolio turnover, looking at year-over-year movements, 3% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

High

Process

JPMorgan’s  team is comparable to peers, resulting in an Average People Pillar rating. There are four managers listed on the fund: Michael Loeffler, Nicholas D’Eramo, Oliver Furby, Alex Hamilton. Experience on the team is abundant, with 12 years of average portfolio management experience. Together, they manage a total of eight strategies, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

People

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 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.

Above Average

Parent

JPMorgan BetaBuilders Japan ETF

BBJP tracks a market cap-weighted index of Japanese large- and mid-cap stocks.

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Inflation slowed down in March but underlying inflationary pressures are still alive. The BoJ's pause at its next week's meeting is widely expected but markets will pay more attention to the BoJ's quarterly outlook report.

Cooler Inflation Ahead Of The Bank of Japan Meeting

Japan's equity benchmark, the Nikkei 225 Index, has been on a tear in 2024, eclipsing its previous high set back in 1989. As of early April, the index is hovering near 40,000. Solid economic growth, a revamp in the country's tax-free stock investment program and corporate governance reform have helped propel Japanese equities to record highs.

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The Bank of Japan is set to normalise monetary policy when certain conditions are met, namely inflation, positive real cash earnings, and a recovery in domestic demand growth. We expect the window for normalisation to open from July for about a year before inflation begins to fall below 2%.

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The Bank of Japan's historic move to end the country's negative interest rate policy after nearly two decades triggered a jolt upward to new all-time highs for gold against the yen. The BoJ announced it will now hold short-term rates at a still-accommodative 0% to 0.1% and is getting rid of its yield curve control program and ETF purchases.

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Japan's private sector picked up growth momentum into the end of the first quarter, according to flash PMI data.

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Kazuo Ueda becomes Governor of the Bank of Japan, continuing the loose monetary policies implemented by his predecessor. The BOJ raises short rates from -0.1% to 0.1%, becoming the last central bank to exit a Negative Interest Rate Policy.

End Of An Era - Bank of Japan Reverses Negative Interest Rate Policy

The Bank of Japan raised interest rates for the first time since 2007 and has eliminated the yield curve control framework. According to the central bank, the virtuous cycle between wages and prices was assessed to have come into sight, bringing the 2% inflation target within a sustainable and stable possibility by the end of fiscal year 2025.

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The Bank of Japan has now ended decades of unconventional and aggressive monetary easing. Strong wage negotiation results played a crucial role in today's move.

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Japan's private sector activity broadly stagnated in February according to flash PMI data, attributed to a combination of slowing services activity growth and an acceleration in manufacturing output contraction. A sharper decline in goods new orders, underpinned by sluggish demand conditions, also largely offset improved demand for services.

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While the China macro story of ongoing transition is a headwind to the rest of Asia, there is more to the region's economic health than this.

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Japan's economic growth is projected to decelerate to 0.9% in 2024 and 0.8% in 2025. Government policies have helped the recovery of Japanese stocks and will continue to be a positive factor going forward.

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The Bank of Japan stood pat on monetary policy today as widely expected. But the market is now paying attention to a more positive tone on the wage and inflation outlook, as well as an upgrade to the FY2024 inflation outlook which lays the groundwork for policy normalisation.

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For investors seeking momentum, JPM Betabuilders Japan ETF BBJP is probably on the radar. The fund just hit a 52-week high and is up 18.95% from its 52-week low price of $45.02/share.

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In its final policy meeting of the year, the Bank of Japan (BOJ) decided to maintain its ultra-loose monetary policy due to the presence of "extremely high uncertainties" affecting the country's economy.

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Japanese securities have been gaining momentum lately driven by increased foreign inflow helped by improved corporate earnings and reforms in corporate governance. Along with the optimistic outlook by Berkshire Hathaway on the country, look at ETFs with exposure to Japan.

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Japan's private sector growth ground to a halt in November according to the latest flash PMI data, which is based on about 85%-90% of total PMI survey responses each month. This was mainly attributed to a sharper fall in manufacturing output as service activity expanded at a slightly faster pace in the penultimate month of the year.

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The Japanese stock market is having itself a hot minute. The Nikkei 225 index, a benchmark for Japanese equities, is up nearly 30 percent so far this year.

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Things were looking tough for the BoJ as recently as this summer, when the country's core CPI bolted north of 4%, far beyond the 2% inflation target that major central banks view as ideal. The Bank of Japan is being reactive to an inflation threat that may very well be in the rearview mirror.

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The debate over the future of Japan continues. Because of its small footprint, we often forget the oversized role Japan plays in the global economy.

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October's flash PMI data revealed that Japan's private sector economy concluded the eight-month growth streak that commenced in January 2023. This was attributed primarily to a sharper fall in manufacturing production, though services activity growth also slowed to the weakest in the year-to-date.

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The IMF, the World Bank, and the United Nations all rank China and Japan as the second and third largest economies on the planet. More of what is occurring in the markets should reflect what is happening in China and Japan which are strongly linked economically.

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It is disappointing that labour cash earnings were weaker than expected in Japan, but consumption held up relatively well. Meanwhile, due to the recent spike in market rates and high inflation, the Bank of Japan is expected to change its YCC policy and forward guidance at its October meeting.

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News for JPMorgan BetaBuilders Japan ETF ETF (BBJP)