JPMorgan Active Value ETF earns an Above Average Process Pillar rating.
The most substantial contributor to the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. The size of the portfolio management team also bolsters the rating. With four portfolio managers, the fund is reasonably well-resourced. However, the process is limited by the number of months that the management team has been running this vehicle together.
This strategy tends to pick smaller market-cap firms compared with the average fund in its peer group, the Large Value Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Examining additional factor exposure, this strategy has consistently tilted toward companies with relatively higher trading volumes in the last few years. More-liquid assets are easier to buy and sell without adversely moving their prices and tend to provide some ballast during market selloffs. They also are easier to sell to meet redemptions if a host of investors decide to leave the fund in a short period of time. In recent months, the strategy was more exposed to the Liquidity factor compared with its Morningstar Category peers as well. This strategy has also favored low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects could rest on its ability to beat peers during economic booms. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. Additionally, the managers have consistently taken on more risk, demonstrated by higher volatility exposure than peers. This contributes to a higher-risk, higher-reward approach. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.
The portfolio has allocations in its top two sectors, consumer cyclical and real estate, that are similar to the category. The sectors with low exposure compared to category peers are communication services and technology, with communication services underweighting the average portfolio by 2.6 percentage points of assets and technology similar to the average. The portfolio is positioned across 165 holdings and is diversified among those holdings. In its most recent portfolio, 21.7% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category’s 29.7% average. And in closing, in terms of portfolio turnover, this fund trades more frequently than its average peer, potentially racking up additional expenses for investors and creating a drag on performance.