JP Morgan Asset Management has launched the JPMorgan Diversified Return US Small Cap Equity ETF (JPSE), which is designed to serve either as a complement or replacement to market-cap weighted approaches.
Similar to other funds in JP Morgan's suite of ETFs, JPSE tracks a strategic beta index whose methodology is designed to capture much of the upside while pursuing less volatility in down markets compared to a market cap-weighted index.
JPSE tracks the Russell 2000 Diversified Factor Index. The index aims to deliver higher risk-adjusted returns than a traditional market cap-weighted index. The index uses a multi-factor stock ranking process (value, quality and momentum) and then broadly diversifies risk across sectors and stocks to avoid undue risk concentrations.
The index is constructed based on the firm's active insights and risk management expertise. JPSE will be managed by Yazann Romahi, chief investment officer of quantitative beta strategies, as well as Joe Staines, Jonathan Msika and Steven Wu. Romahi and team have been focused on beta philosophy research and development for more than a decade.
"In choppy markets, many investors are seeking a less volatile way to participate in equities,” says Robert Deutsch, global head of ETFs for JP Morgan Asset Management. "JPSE is a cost-efficient, risk-managed approach to US small cap investing, enabling clients to get invested in the equity markets."
"FTSE Russell market research indicates that investors are looking for index tools and ETFs based on leading benchmarks to help them pursue a wide range of their objectives, including lower volatility, return enhancement and diversification,” says Ron Bundy, CEO North America Benchmarks at FTSE Russell. "Our Russell 2000 Diversified Factor Index is designed to deliver these benefits in a rules based and transparent manner."