Credit: Shutterstock photoIf you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the JPMorgan Diversified Return U.S. Equity ETF (JPUS), a passively managed exchange traded fund launched on 09/29/2015.
The fund is sponsored by J.P. Morgan. It has amassed assets over $473.88 M, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.19%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.55%.
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 Healthcare sector--about 16.40% of the portfolio. Consumer Discretionary and Information Technology round out the top three.
Looking at individual holdings, Exelon Corp Common Stock (EXC) accounts for about 0.61% of total assets, followed by Dr Pepper Snapple Group (DPS) and American Water Works Co (AWK).
The top 10 holdings account for about 5.81% of total assets under management.
Performance and Risk
JPUS seeks to match the performance of the Russell 1000 Diversified Factor Index before fees and expenses. The Russell 1000 Diversified Factor Index comprises of U.S. equity securities selected to represent a diversified set of factor characteristics, originally developed by the adviser.
The ETF has added roughly 0.61% so far this year and was up about 12.58% in the last one year (as of 05/15/2018). In the past 52-week period, it has traded between $63.21 and $74.58.
The ETF has a beta of 0.94 and standard deviation of 11.33% for the trailing three-year period, making it a medium risk choice in the space. With about 523 holdings, it effectively diversifies company-specific risk.
Alternatives
JPMorgan Diversified Return U.S. 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, JPUS is a good option for those seeking exposure to the Large Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $147.22 B in assets, SPDR S&P 500 ETF has $260.43 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
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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Exelon Corporation (EXC): Free Stock Analysis Report
American Water Works (AWK): Free Stock Analysis Report
Dr Pepper Snapple Group, Inc (DPS): Free Stock Analysis Report
SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
JPM-DVSFD RET (JPUS): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
