JPMorgan International Rsrch Enh Eq ETF earns an Above Average Process Pillar rating.
The leading factor in the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. The parent firm's five-year risk-adjusted success ratio of 57% also supports the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their relatively high success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.
This strategy leans toward larger, more growth-oriented companies than its average peer in the Foreign Large Blend Morningstar Category. 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. Different from its historical appetite, however, the strategy was less exposed to the Liquidity factor compared with Morningstar Category peers in the most recent month. This strategy has had more exposure to high-momentum stocks over its peers in recent years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. Compared with category peers, the strategy also had more exposure to the Momentum factor in the most recent month. In addition, this strategy has an underweight bias to the volatility factor, meaning investing in stocks that have a lower standard deviation of returns. Such holdings can limit a strategy's downside, but cause it to lag in bull markets. In recent months, the strategy also had less Volatility 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 healthcare by 2.6 percentage points in terms of assets compared with the category average, and its utilities allocation is similar to the category. The sectors with low exposure compared to category peers are technology and basic materials, with technology underweighting the average portfolio by 2.5 percentage points of assets and basic materials similar to the average. The portfolio is positioned across 203 holdings and is relatively top-heavy. Of the strategy's assets, 20.2% are concentrated within the top 10 holdings, as opposed to the category’s 15.1% average. And finally, in terms of portfolio turnover, on a year-over-year basis, 16% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.