JPMorgan BetaBuilders U.S. Tip 0-5 YrETF BBIP

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

The strategy's effective investment philosophy earns it a High Process Pillar rating. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category index on a risk-adjusted basis over the long term.

The main driver of the rating is that this fund tracks an index. Historical data, like Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons.

The investment strategy as stated in the fund's prospectus is:

The investment seeks investment results that closely correspond, before fees and expenses, to the performance of the ICE 0-5 Year US Inflation-Linked Treasury Index. The fund seeks investment results that closely correspond, before fees and expenses, to the performance of the underlying index, which tracks the performance of U.S. dollar denominated sovereign debt publicly issued by the U.S. government in its domestic market with interest and principal payments tied to inflation, and with a remaining term to final maturity of less than or equal to five years. The fund will invest at least 80% of its assets in securities included in the underlying index.

This strategy has a 6.1% 12-month yield and a 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return) of 2.7%. The holdings' average surveyed credit quality is AA and it does not hold any non-investment-grade assets. This fund carries an average effective duration of 2.5 years, so this fund is expected to gain 2.5% of its net asset value if interest rates drop by 1 percentage point, and vice versa.

There are three managers listed on the fund: Jan Ho, Mark Willauer, Evan Olonoff. The team is largely unproven, as its members only average four years of portfolio management experience. Together, they manage a total of six strategies, with solid long-term prospects. The strategies average a Silver asset-weighted average Morningstar Medalist Rating, indicating a position to deliver positive alpha relative to the category median in aggregate. The team has faced turnover as of late, with Naveen Kumar leaving within the last about a month ago. Even though it is a passive fund, high turnover can still hinder the effectiveness of the investment process.

Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

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.

That said, it is too early to have a strong opinion on its prospects. In the past twelve months, this share class has returned 6.3%, compared with the 6.4% return of the category benchmark for the same period. But during that time, it outperformed the category average's 4.9% return for the period.

This fund lands in the cheapest quintile of its Morningstar Category. Its affordable expense ratio, paired with the fund’s People, Process, and Parent Pillars, indicates that this share class is well-positioned to generate positive alpha versus the lesser of its median category peer or the category benchmark, leading to its Morningstar Medalist Rating of Silver.