A smart beta exchange traded fund, the JPMorgan Diversified Return Emerging Markets Equity ETF (JPEM) debuted on 01/07/2015, and offers broad exposure to the Broad Emerging Market ETFs category of the market.
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
JPEM is managed by J.P. Morgan, and this fund has amassed over $317.39 million, which makes it one of the average sized ETFs in the Broad Emerging Market ETFs. This particular fund seeks to match the performance of the FTSE Emerging Diversified Factor Index before fees and expenses.
The JP Morgan Diversified Factor Emerging Markets Equity Index reflects the performance of emerging market securities representing a diversified set of factor characteristics which include Value, Price, Momentum, Earnings, Revisions and Quality characteristics.
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 JPEM are 0.44%, which makes it on par with most peer products in the space.
JPEM's 12-month trailing dividend yield is 5.03%.
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.
Taking into account individual holdings, Taiwan Semiconductor accounts for about 1.91% of the fund's total assets, followed by Infosys Ltd Common Stock (INFY_D.) and Bank Of China Ltd Common.
The top 10 holdings account for about 10.9% of total assets under management.
So far this year, JPEM has gained about 1.79%, and is up about 3.23% in the last one year (as of 03/07/2025). During this past 52-week period, the fund has traded between $50.81 and $57.84.
The ETF has a beta of 0.68 and standard deviation of 13.15% for the trailing three-year period, making it a medium risk choice in the space. With about 557 holdings, it effectively diversifies company-specific risk.
JPMorgan Diversified Return Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $82.78 billion in assets, iShares Core MSCI Emerging Markets ETF has $83.50 billion. VWO has an expense ratio of 0.07% and IEMG charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs.
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 Emerging Markets Equity ETF (JPEM): ETF Research Reports
iShares Core MSCI Emerging Markets ETF (IEMG): ETF Research Reports
Vanguard FTSE Emerging Markets ETF (VWO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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