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    1. The Strategic Beta Approach

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    JPMorgan ETF Alternatives


    Strategic beta
     

    Beyond market cap

    Most index funds globally are invested in pure passive strategies that track traditional market cap weighted indices.

    Market cap weighting is simply the process of building an index based on the size of its constituents. However, while this approach is favoured by most index funds, it does lead to some well publicised limitations.

    Equity indices, for example, are proportionally more concentrated in the stocks, sectors and regions that have performed well in the past, not necessarily those that will perform well in the future, while bond indices are biased towards the most indebted issuers, not necessarily the most solvent.

    These inherent biases constitute unrewarded risks that investors may want to control their exposure to, or even eliminate entirely when investing in less liquid or less efficient markets.

    Risk-aware indexation

    An alternative, risk-aware approach to passive investing is provided by smart (or strategic) beta funds. These funds track indices that use criteria other than company or issuer size to determine portfolio holdings.

    Some indices weigh constituents or issuers equally, while some screen for securities with specific characteristics—such as low valuations, liquidity, strong earnings or price momentum, or credit quality. And some do both.

    The aim is to provide investors with cost-effective, passive exposure to the return potential of specific markets and asset classes, while reducing the risks inherent in market cap weighted indices and focusing on the objectives of the end investor.

    There are now many innovative ways to access markets using a strategic beta approach. When it comes to passive investing, market-cap weighted should no longer be the automatic choice.

    Next Generation ETFs: Redefining the Index

    Discover the risks of investing in market-cap weighted ETFs; and find out how a Strategic Beta approach can help to reduce index risks for investors.

    Find out more

    FEATURED ETFS

    These ETFs provide exposure to the return and yield potential of emerging market debt, while enhancing liquidity and improving country and credit risk allocations relative to traditional market cap-weighted benchmarks.

    (JPMB) JPMorgan ETFs (Ireland) ICAV - USD Emerging Markets Sovereign Bond UCITS ETF

    The JPMB fixed income strategy provides exposure to the return and yield potential of emerging market debt, while enhancing liquidity and improving country and credit risk allocations relative to traditional market cap-weighted benchmarks.

    USD (dist) - Product page >

    EUR Hedged (acc) - Product page >
     

    (JPGL) JPMorgan ETFs (Ireland) ICAV - Global Equity Multi-Factor UCITS ETF

    JPGL tracks the JP Morgan Diversified Factor Global Developed (Region Aware) Equity Index whose methodology is designed to provide a core exposure to the market with a better risk-adjusted return compared to a market cap-weighted index.

    USD  (acc) - Product page >
     

    This is a marketing communication and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader. Any research in this document has been obtained and may have been acted upon by J.P. Morgan Asset Management for its own purpose. The results of such research are being made available as additional information and do not necessarily reflect the views of J.P. Morgan Asset Management. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. It should be noted that the value of investments and the income from them may fluctuate in accordance with market conditions and investors may not get back the full amount invested. Past performance and yield are not a reliable indicator of current and future results. There is no guarantee that any forecast made will come to pass. J.P. Morgan Asset Management is the brand name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. To the extent permitted by applicable law, we may record telephone calls and monitor electronic communications to comply with our legal and regulatory obligations and internal policies. Personal data will be collected, stored and processed by J.P. Morgan Asset Management in accordance with our EMEA Privacy Policy www.jpmorgan.com/emea-privacy-policy.
     

    This communication is issued in Europe (excluding UK) by JPMorgan Asset Management (Europe) S.à r.l., 6 route de Trèves, L-2633 Senningerberg, Grand Duchy of Luxembourg, R.C.S. Luxembourg B27900, corporate capital EUR 10.000.000.

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