The JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) was launched on 11/15/2016, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by J.P. Morgan. It has amassed assets over $548.74 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.

Why Small Cap Blend

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.29%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.60%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 13.70% of the portfolio. Information Technology and Financials round out the top three.

Looking at individual holdings, Nuscale Power Corp (SMR) accounts for about 0.51% of total assets, followed by Geo Group Inc/the Common (GEO) and Corcept Therapeutics Inc (CORT).

The top 10 holdings account for about 4.16% of total assets under management.

Performance and Risk

JPSE seeks to match the performance of the Russell 2000 Diversified Factor Index before fees and expenses. The JP Morgan Diversified Factor US Small Cap Equity Index utilizes a rules-based approach that combines risk-based portfolio construction with multi-factor security selection, including value, quality and momentum factors.

The ETF return is roughly 16.14% so far this year and is up about 25.64% in the last one year (as of 12/06/2024). In the past 52-week period, it has traded between $41.36 and $51.70.

The ETF has a beta of 1.14 and standard deviation of 20.82% for the trailing three-year period. With about 560 holdings, it effectively diversifies company-specific risk.

Alternatives

JPMorgan Diversified Return U.S. Small Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JPSE is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $81.89 billion in assets, iShares Core S&P Small-Cap ETF has $93.89 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE): ETF Research Reports

Geo Group Inc (The) (GEO) : Free Stock Analysis Report

Corcept Therapeutics Incorporated (CORT) : Free Stock Analysis Report

iShares Russell 2000 ETF (IWM): ETF Research Reports

iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports

NuScale Power Corporation (SMR) : Free Stock Analysis Report

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