JPMorgan Emerging Markets Equity Core ETF
SUMMARY
Actively-managed but aims to hug MSCI EM index. Thus, it's an EM index fund with some investment latitude.
ANALYSIS
Completes JPM's ETF lineup. Offers its distributors a complete investment solution package now. With JPM's established and captive distribution network, and at less than half the management fees of iShares' EEM (0.70%), this is sure to grab a big chunk of market share. From an investment perspective, the timing is right as established investors rebalance their portfolios, and the social media-driven retail market dips its toes into the market in general.
Ticker: JEMA
Exchange: Cboe
Expense ratio: 0.33%
Original filing date: December 18, 2020
Effective date: March 3, 2021
Listing Date: March 11, 2021
CUSIP: 46641Q266
Active: Yes
Index / Benchmark: MSCI Emerging Markets Index net of foreign withholding taxes
Investment Objective: The Fund seeks to provide long-term capital appreciation.
Investment Strategy:
Portfolio of holdings that will outperform the Benchmark over time while maintaining similar risk characteristics, including sector and geographic risks.
Both a top down and bottom up research process as well as a combination of fundamental and quantitative inputs to allocate the Fund’s assets among a range of sectors.
Adviser: J.P. Morgan Investment Management Inc.
Sub-Adviser: None
Constituents: TBD
Geographical scope: (by exclusion) - Countries in the world except:
- Australia
- Canada
- Japan
- New Zealand
- the United Kingdom
- the United States
- most of the countries of Western Europe
- Hong Kong
Prospectus is here.
Main investment strategies
Under normal circumstances, the Fund invests at least 80% of its Assets in equity securities and equity-related instruments that are tied economically to emerging markets. “Assets” means net assets, plus the amount of borrowings for investment purposes.
Emerging markets include most countries in the world except Australia, Canada, Japan, New Zealand, the United Kingdom, the United States, most of the countries of Western Europe and Hong Kong, although the Fund may invest in securities tied to those countries as well.
The Fund’s investments represent allocations to a variety of the adviser’s actively managed emerging market equity strategies, including country, region and style strategies, among others.
The Fund will overweight or underweight countries and sectors relative to the MSCI Emerging Markets Index (net of foreign withholding taxes).
In implementing its strategy, the Fund seeks to construct a portfolio of holdings that will outperform the Benchmark over time while maintaining similar risk characteristics, including sector and geographic risks.
The equity securities and equity-related instruments in which the Fund may invest include, but are not limited to, common stock, participation notes or other structured notes, and other instruments that provide economic exposure to one or more equity securities.
The Fund may invest in securities across all market capitalizations, although the Fund may invest a significant portion of its assets in companies of any one particular market capitalization category.
Securities and equity-related instruments tied economically to an emerging market include:
(i) securities of issuers that are organized under the laws of an emerging markets country or that maintain their principal place of business in an emerging markets country;
(ii) securities that are traded principally in an emerging market country;
(iii) securities of issuers that, during their most recent fiscal year, derived at least 50% of their revenues or profits from goods produced or sold, investments made, or services performed in an emerging markets country or that have at least 50% of their assets in an emerging market country; or
(iv) securities or other instruments that expose the Fund to the economic fortunes and risks of one or more emerging market countries.
There is no limit on the number of countries in which the Fund may invest, and the Fund may focus its investments in a single country or a small group of countries
The Fund may use exchange-traded funds to gain exposure to particular foreign securities or markets and for the efficient management of cash flows.
The Fund may invest in securities denominated in any currency and will invest substantially in securities denominated in foreign currencies.
Derivatives, which are instruments that have a value based on another instrument, exchange rate or index, may also be used as substitutes for securities in which the Fund can invest.
The Fund may utilize currency forwards (including nondeliverable forwards) to manage currency exposures, where practical, for the purpose of risk management, including hedging non-dollar currency exposure back to the U.S. dollar.
The Fund may also use exchanged-traded futures for the efficient management of cash flows.
Investment Process
In managing the Fund, the adviser uses both a top down and bottom up research process as well as a combination of fundamental and quantitative inputs to allocate the Fund’s assets among a range of sectors.
In buying and selling investments for the Fund, the adviser looks for market sectors and individual securities that it believes will perform well over time.
The adviser selects individual securities after performing a risk/reward analysis to address the Fund’s objective of providing a high total return. Research produced by the adviser includes in-depth, fundamental research into individual securities conducted by research analysts, who emphasize each issuer’s long-term prospects, and disciplined top-down macro and quantitative research using the latest technology available to the firm.
Research analysts use their local expertise to identify, research, and rank companies according to their expected performance. As a part of this analysis, research analysts seek to assess the risks presented by certain environmental, social and governance factors.
While these particular risks are considered, securities of issuers presenting such risks may be purchased and retained by the Fund.
