Making its debut on 05/11/2016, smart beta exchange traded fund JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME) provides investors broad exposure to the Style Box - Mid Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by J.P. Morgan, JPME has amassed assets over $453.66 million, making it one of the average sized ETFs in the Style Box - Mid Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Russell Midcap Diversified Factor Index.
The JP Morgan Diversified Factor US Mid Cap Equity Index utilizes a rules-based approach that combines risk-based portfolio construction with multi-factor security selection, including value, quality and momentum factors.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.24% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.76%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For JPME, it has heaviest allocation in the Industrials sector --about 12.3% of the portfolio --while Healthcare and Real Estate round out the top three.
Looking at individual holdings, Western Digital Corp (WDC) accounts for about 0.81% of total assets, followed by Hewlett Packard (HPE) and Iridium Communications (IRDM).
Its top 10 holdings account for approximately 6.24% of JPME's total assets under management.
Performance and Risk
Year-to-date, the JPMorgan Diversified Return U.S. Mid Cap Equity ETF has added roughly 15.26% so far, and it's up approximately 20.32% over the last 12 months (as of 07/14/2026). JPME has traded between $103.48 $124.88 in this past 52-week period.
JPME has a beta of 0.88 and standard deviation of 13.93% for the trailing three-year period. With about 356 holdings, it effectively diversifies company-specific risk .
Alternatives
JPMorgan Diversified Return U.S. Mid Cap Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Mid-Cap Index Fund ETF Shares (VO) tracks CRSP US Mid Cap Index and the iShares Core S&P Mid-Cap ETF (IJH) tracks S&P MidCap 400 Index. Vanguard Mid-Cap Index Fund ETF Shares has $106.19 billion in assets, iShares Core S&P Mid-Cap ETF has $121.59 billion. VO has an expense ratio of 0.03% and IJH changes 0.05%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Blend
Bottom Line
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JPMorgan Diversified Return U.S. Mid Cap Equity ETF (JPME): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).