JPMorgan Diversified Return International Equity ETF JPIN leans toward cheaper and higher-quality stocks. But its large sector and country bets can derail performance.

This strategy starts with the FTSE Developed ex North America Index and splits it into four regions and 10 sectors within each region, creating 40 regional sector buckets. It weights each of those segments by the inverse of its historical volatility, pushing the fund toward stable segments of the market and away from those that are more volatile. Within each regional sector, the strategy ranks constituents by their value, momentum, and quality characteristics. It combines these scores into an overall composite score and sweeps the highest-scoring names into the portfolio. Stocks within each regional sector are weighted equally, subject to constraints designed to promote diversification and ease trading.

This portfolio looks substantially different from the market. It tends to lean toward the value, small-size, and quality factors, and it moved to the foreign large-value Morningstar Category from foreign large blend in October 2022. Aside from those risk factors, the portfolio is making a number of active bets that can be counterproductive. For example, the fund's preference for smaller stocks worked to its advantage over the two years through September 2022. However, smaller allocations to the energy and financials sectors erased any benefit and contributed to the fund’s 7.8 annualized shortfall relative to the MSCI ACWI ex USA Value.

Overall, the portfolio possesses some defensive characteristics, but its downside protection has been fickle. J.P. Morgan launched this exchange-traded fund in late 2014 when the market was in a drawdown, and it initially outperformed the MSCI ACWI ex USA Value by 14.5 percentage points from December 2014 through January 2016. Since then, it hasn't provided much shelter from stormy markets. It had a small advantage over the category index during the coronavirus drawdown in early 2020, but it lagged the same benchmark by 5.2 percentage points during the 2022 global market drawdown.

Analyst Rating

It's complicated.

Senior Analyst

Daniel Sotiroff

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This strategy does a decent job of harnessing factor exposures, but it makes a lot of active bets. The portfolio looks very different from its parent universe, and those deviations may not always be compensated with higher risk-adjusted returns. It earns an Average Process Pillar.

Average

Process

The team has the tools and experienced personnel necessary to provide tight index tracking, but it does not have the resources of its larger competitors. It earns an Average People Pillar rating.

J.P. Morgan's quant beta solutions team was formed in January 2017, when it took over management of this fund and the firm's other strategic-beta ETFs. Five portfolio managers share responsibility for this ETF. Yaz Romahi serves as the team's CIO and helped develop the strategy, while Joe Staines and Kartik Aiyar have worked on this fund since the team’s formation. Both started their asset-management tenures at J.P. Morgan in mid-2014. Alistair Lowe left his portfolio management role in late 2022 for another position at J.P. Morgan. Victor Li also left this fund, but he still serves as a manager on other quantitative funds. Natalia Zvereva and Steven Wu replaced them.

Most of the team's workflow is conducted through Spectrum—J.P. Morgan's in-house portfolio management platform—which automates many aspects of day-to-day workflow. Two risk oversight teams monitor the funds managed by the quant beta solutions team. Both provide tracking-error targets, and tracking performance is formally reported each quarter. The managers' compensation is tied to tracking performance, aligning their interests with investors'.

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

J.P. Morgan Diversified Return International Equity ETF

JPIN tracks an index of developed ex-North America securities that are selected based on value, momentum, and quality factors, then weighted by the inverse of historical volatility on a sector and regional level.

The JPMorgan Diversified Return International Equity ETF (JPIN) made its debut on 11/06/2014, and is a smart beta exchange traded fund that provides broad exposure to the Broad Developed World ETFs category of the market.

Is JPMorgan Diversified Return International Equity ETF (JPIN) a Strong ETF Right Now?

JPMorgan Diversified Return International Equity ETF offers quarterly payouts and has generated a 5-year annual average yield of 3.53% and 5-year annual average total return of 6.8%. JPIN diversifies its investments in four regions - Japan, United Kingdom, Europe, and Rest of Asia; and invests in all major segments of those regions.

JPIN: A Decent International Equity Fund With A Less Than Adequate Return

The JPMorgan Diversified Return International Equity ETF (JPIN) invests based on an in-house diversified factor benchmark.  Both the ETF and benchmark are reviewed. While being International in scope, the underlying Index only contains non-US Developed countries: no Emerging Market exposure.  They have a separate ETF for that segment.

JPMorgan Diversified Return International Equity ETF: Invest Elsewhere

JPIN pays quarterly dividends, and has generated a yield of 5.9 percent. The annual average total returns during 2017 to 2021 was almost 11 percent. JPIN has tried to create a good balance in its portfolio through investing in a large number of value stocks that are less volatile but generate high returns.

JPIN: Global ETF Investing In Low-Risk Value Stocks, Generating Strong Returns

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