JPMorgan Global Select Equity ETF JGLO

The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.

The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in momentum exposure and quality exposure compared with category peers. Momentum exposure is attributed to holding stocks currently on a winning streak and selling those that are on a downtrend. And a high quality exposure is rooted in holding stocks with low financial leverage and strong returns on equity. The management team's considerable industry experience earns it an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Jpmorgan Global Select Equity ETF earns an Above Average Process Pillar rating.

The primary contributor to the rating is the fund's strong long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's superior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also contributes to the process. However, the process is limited by the number of months that the management team has been running this vehicle together.

This strategy tends to hold larger, higher-growth companies compared with its average peer in the Global Large-Stock Blend Morningstar Category. Analyzing additional factors, this strategy has continually had exposure to high-momentum stocks compared with Morningstar Category peers in the last few years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. In recent months, the strategy was more exposed to the Momentum factor compared with its Morningstar Category peers as well. This strategy also has had a defensive tilt, with exposure to higher-quality stocks compared with peers in recent years. This means that the fund holds companies that are profitable, growing, and have solid balance sheets. Though it may trail peers during an economic boom, this orientation contributes to helping it weather periods of economic stress better. Compared with category peers, the strategy also had more exposure to the Quality factor in the most recent month. Furthermore, this strategy has leaned toward low-yield stocks over recent years, holding fewer companies with high dividend or buyback yields. 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 recent months, the strategy also had less Yield factor exposure than 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 technology and consumer cyclical relative to the category average by 5.8 and 3.5 percentage points, respectively. The sectors with low exposure compared to category peers are industrials and communication services, underweight the average by 7.0 and 3.1 percentage points of assets, respectively. The portfolio is positioned across 81 holdings and is quite concentrated. More concretely, 40.2% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 29.7%. And finally, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.

The most significant contributor to the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average ten-year Morningstar Rating of 3.3 stars. The combined average five-year excess return of each manager also supports the rating. It suggests that the funds they manage have beat the average manager. Lastly, the rating is limited because no manager has invested more than$ 1 million in the fund.

Helge Skibeli, the longest-tenured manager on the strategy, provides strong guidance, offering 20 years of listed portfolio management experience. Helge Skibeli has an experienced listed co-manager. Together, they average 14 years of listed portfolio management experience.

J.P. Morgan is a well-resourced, diligent, and responsible steward of client assets. Investment teams are seasoned and stalwart, especially in equity and fixed income, the latter of which has successfully undergone substantial transformation in recent years. The firm offers competitive compensation that is aligned with fundholders and shows strong retention at senior levels of the organization. It demonstrates a culture of constant innovation and willingness to evolve. For example, J.P. Morgan recently expanded its investment committee process through which senior leaders review various teams and strategies, and it continues to develop proprietary portfolio management and risk oversight tools. Some funds still face high fee hurdles, but the firm has generally lowered expenses as it has grown.

The firm isn't without its complications. J.P. Morgan's product offering is extensive, and some areas need improvement. For instance, its multi-asset business has faced some challenges as a result of complex investment processes. The firm continues to build out its footprint in China, but its efforts there remain unproven. Although not every strategy is the best in its class, J.P. Morgan remains earnest in the pursuit of excellence, and investors are well-served.

Its performance has been strong so far. That said, it is too early to have a strong opinion on its prospects. In the past eleven months, this share class has returned 33.7%, compared with the 28.8% return of the category benchmark, the MSCI ACWI Index, for the same period. During that time, it also outperformed the category average's 25.2% return for the period.

This share class sits in the cheapest quintile of its Morningstar Category. Its affordable expense ratio, taken together with the fund’s People, Process, and Parent Pillars, indicates that this share class should be able to deliver positive alpha against its category benchmark, explaining its Morningstar Medalist Rating of Silver.