Should JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) Be on Your Investing Radar?

The JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) was launched on 05/11/2016, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Blend segment of the US equity market.

The fund is sponsored by J.P. Morgan. It has amassed assets over $375.97 million, making it one of the average sized ETFs attempting to match the Mid Cap Blend segment of the US equity market.

Why Mid Cap Blend

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. Thus they have a nice balance of growth potential and stability.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.24%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.76%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation to the Industrials sector--about 12.40% of the portfolio. Healthcare and Real Estate round out the top three.

Looking at individual holdings, Williams-Sonoma Inc (WSM) accounts for about 0.47% of total assets, followed by Celsius Holdings Inc (CELH) and Dick's Sporting Goods (DKS).

The top 10 holdings account for about 4.42% of total assets under management.

Performance and Risk

JPME seeks to match the performance of the Russell Midcap Diversified Factor Index before fees and expenses. 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.

The ETF has added about 5.74% so far this year and it's up approximately 18.50% in the last one year (as of 05/28/2024). In the past 52-week period, it has traded between $79.30 and $99.14.

The ETF has a beta of 1.04 and standard deviation of 16.78% for the trailing three-year period. With about 369 holdings, it effectively diversifies company-specific risk.

Alternatives

JPMorgan Diversified Return U.S. Mid Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JPME is a good option for those seeking exposure to the Style Box - Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While Vanguard Mid-Cap ETF has $64.63 billion in assets, iShares Core S&P Mid-Cap ETF has $84 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 Diversified Return U.S. Mid Cap Equity ETF (JPME): ETF Research Reports

DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report

iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports

Vanguard Mid-Cap ETF (VO): ETF Research Reports

Celsius Holdings Inc. (CELH) : Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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