If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the JPMorgan BetaBuilders U.S. Small Cap Equity ETF (BBSC), a passively managed exchange traded fund launched on 11/16/2020.

The fund is sponsored by J.P. Morgan. It has amassed assets over $526.04 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

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 0.09%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.24%.

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 Financials sector--about 18.60% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Credo Technology Group (CRDO) accounts for about 0.57% of total assets, followed by Ionq Inc Common Stock (IONQ) and Rocket Lab Usa Inc (RKLB).

The top 10 holdings account for about 4.09% of total assets under management.

Performance and Risk

BBSC seeks to match the performance of the MORNINGSTAR US SML CP TRG MRK EXP EXT ID before fees and expenses. The Morningstar US Small Cap Target Market Exposure Extended Index is a free-float adjusted, market-cap weighted index that targets small cap securities traded in the U.S.

The ETF has gained about 3.93% so far this year and it's up approximately 20.07% in the last one year (as of 01/24/2025). In the past 52-week period, it has traded between $57.47 and $74.87.

The ETF has a beta of 1.13 and standard deviation of 23.33% for the trailing three-year period. With about 797 holdings, it effectively diversifies company-specific risk.

Alternatives

JPMorgan BetaBuilders U.S. Small Cap Equity ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, BBSC is an outstanding option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Avantis U.S. Small Cap Value ETF (AVUV) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While Avantis U.S. Small Cap Value ETF has $16.05 billion in assets, Vanguard Small-Cap Value ETF has $32.37 billion. AVUV has an expense ratio of 0.25% and VBR charges 0.07%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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 BetaBuilders U.S. Small Cap Equity ETF (BBSC): ETF Research Reports

Vanguard Small-Cap Value ETF (VBR): ETF Research Reports

Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports

Rocket Lab USA, Inc. (RKLB) : Free Stock Analysis Report

IonQ, Inc. (IONQ) : Free Stock Analysis Report

Credo Technology Group Holding Ltd. (CRDO) : Free Stock Analysis Report

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