A smart beta exchange traded fund, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) debuted on 05/11/2016, and offers broad exposure to the Style Box - Mid Cap Blend category of the market.
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
The fund is managed by J.P. Morgan, and has been able to amass over $419.54 million, which makes it one of the average sized ETFs in the Style Box - Mid Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the Russell Midcap Diversified Factor Index.
The JP Morgan Diversified Factor US Mid 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.
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.24%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.71%.
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
JPME's heaviest allocation is in the Industrials sector, which is about 12.30% of the portfolio. Its Healthcare and Real Estate round out the top three.
Taking into account individual holdings, Vistra Corp Common Stock (VST) accounts for about 0.65% of the fund's total assets, followed by Applovin Corp Common (APP) and Ciena Corp Common Stock (CIEN).
The top 10 holdings account for about 4.77% of total assets under management.
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has added about 17.01% so far, and is up roughly 30.26% over the last 12 months (as of 10/21/2024). JPME has traded between $79.30 and $106.35 in this past 52-week period.
The ETF has a beta of 1.04 and standard deviation of 16.80% for the trailing three-year period. With about 354 holdings, it effectively diversifies company-specific risk.
JPMorgan Diversified Return U.S. Mid Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap ETF (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap ETF has $71.59 billion in assets, iShares Core S&P Mid-Cap ETF has $93.58 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend.
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. Mid Cap Equity ETF (JPME): ETF Research Reports
Ciena Corporation (CIEN) : Free Stock Analysis Report
AppLovin Corporation (APP) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
Vanguard Mid-Cap ETF (VO): ETF Research Reports
Vistra Corp. (VST) : Free Stock Analysis Report
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