JPMorgan Market Expansion Enh Eq ETF’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in momentum exposure and quality exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. 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

Carlisle Companies

GoDaddy

Reliance Steel & Aluminum

Williams-Sonoma

United Therapeutics

EMCOR Group

Vistra Energy

nVent Electric plc

Exelixis

Toll Brothers

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 Market Expansion Enh Eq ETF earns an Above Average Process Pillar rating. 

The primary contributor to 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 beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's superior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also influences the rating. 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, over time, has consistently held more undervalued companies, compared with peers in the Small Blend Morningstar Category. But in terms of market capitalization, it is on par with peers. Analyzing additional factors, this strategy has consistently had low exposure to momentum stocks in the past few years. Momentum strategies typically bet that stocks that have recently outperformed will continue to do so, and those that have recently underperformed will keep lagging. Avoiding the former and buying the latter could indicate that managers are averse to chasing momentum. In the latest month, the strategy was also less exposed to the Momentum factor compared with Morningstar Category peers. The strategy has also had a defensive tilt, demonstrated by lower exposure to the quality factor than peers in recent years. This means the fund has avoided holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to surpass peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have tended to overweight yield, shown by the portfolio's high exposure to stocks paying dividends or buying back shares. Higher-yield stocks can provide dependable income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. In this month, the strategy also had more exposure to the Yield factor 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 consumer cyclical by 3.7 percentage points in terms of assets compared with the category average, and its real estate allocation is similar to the category. The sectors with low exposure compared to category peers are healthcare and technology, with healthcare underweighting the average portfolio by 4.1 percentage points of assets and technology similar to the average. The portfolio is composed of 618 holdings and is less top-heavy than peers. Specifically, 7.0% of the strategy's assets are concentrated within the top 10 fund holdings, compared to the category’s 23.9% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 29% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Above Average

Process

JPMorgan Market Expansion Enh Eq ETF earns an Average People Pillar rating. Phillip D. Hart, the longest-tenured manager on the strategy, boasts 13 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.4 stars, demonstrating underwhelming risk-adjusted performance. The team boasts an experienced corps of listed portfolio managers, with three others supporting Phillip D. Hart. Together, they average 10 years of listed portfolio management experience. As a team, they manage seven investment vehicles together, with solid long-term prospects. The strategies average a Bronze asset-weighted Morningstar Medalist Rating, indicating a position to deliver positive alpha in aggregate. 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.

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.

Parent

JPMorgan Market Expansion Enhanced Equity ETF

JMEE is an actively managed portfolio of small- and mid-cap US stocks and REITs. The fund uses a proprietary selection and weighting criteria, aiming to modestly outperform the total return of the S&P 1000 Index.

JPMorgan Inflation Managed Bond ETF

It's the third in a quartet of mutual fund conversions.

JPMorgan Starts Converting $1.1B Mutual Fund To ETF

It's the second conversion in a quartet of mutual funds changing wrappers.

JPMorgan Starts Converting $938M Mutual Fund To ETF

JPMorgan Asset Management has converted an existing mutual fund offering exposure to the S&P 1000 into an ETF wrapper. The JPMorgan Market Expansion Enhanced Equity ETF (JMEE), incepted in 1998 as a mutual fund and garnered $938 million in assets under management, debuted in its new ETF wrapper on the NYSE on May 9.

News for JPMorgan Market Expansion Enhanced Equity ETF ETF (JMEE)