JPMorgan Sustainable Infrastructure ETF BLLD

The portfolio maintains a 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 an underweight position in yield exposure and an overweight in volatility exposure compared with category peers. Low yield exposure is attributed to holding fewer stocks with high dividend or buyback yields -- instead, typically holding companies with a stronger focus on growth opposed to returning capital. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. This management team earns an Above Average People Pillar rating, despite recent turnover in its ranks. 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 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.

The most important driver of the rating is its parent firm's impressive 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 contributes to the rating. It suggests that the funds they manage have surpassed the average manager. Lastly, the rating is limited by the turnover of its management team. The fund last saw a manager change two months ago, which suggests that it could do more to retain its portfolio managers.

Wei Victor Li brings six years of listed portfolio management experience to the team. There are two managers on this strategy. Together, the two average four years of listed portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

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.

However, its track record is too short to draw a meaningful conclusion. In the past twelve months, this share class has returned 15.2%, compared with the 19.0% return of the category benchmark for the same period. But during that time, it outperformed the category average's 15.0% return for the period.

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