JPMorgan Sustainable Infrastructure ETF earns an Above Average Process Pillar rating.
The main driver of the rating is its parent firm's excellent long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. Low costs across its parent firm's funds, whose fees, on average, rank in the middle quintile of their respective category, also bolster the rating. The pattern of low costs at the firm indicates that it is focused on delivering strong results for investors. However, the process is limited by the experience of the management team, which averages four years at this fund.
This strategy has tended to hold more growth stocks than others in the Infrastructure Morningstar Category. But in terms of market capitalization, it is on par with peers. Analyzing additional factors, this strategy has consistently had less exposure to yield compared with its Morningstar Category peers during recent years. Its preference for stocks with lower yields may well lead to a growthier portfolio. However, growth stocks court additional risks if their forecasts do not come to fruition and are often more volatile than companies with stable dividends. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. This is a higher-risk, higher-reward approach. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. In addition, this strategy holds highly liquid companies. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In recent months, however, the strategy had less Liquidity factor exposure 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 is overweight in real estate by 33.1 percentage points in terms of assets compared with the category average, and its healthcare allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and energy, underweight the average by 15.7 and 7.9 percentage points of assets, respectively. The portfolio is composed of 66 holdings and is quite concentrated. Specifically, 34.9% of the portfolio's assets are housed within the top 10 holdings, versus the category’s 28.3% average. And in closing, in terms of portfolio turnover, this portfolio trades more frequently than the average peer in its category, which may result in higher trading costs for investors and cause a drag on performance.