The search for core equity ETF solutions is often presented as a choice between the simplicity of passive investing and the potential of active management. But what if you could have both—the precision of the index combined with the DNA of a truly active manager?

At J.P. Morgan Asset Management, our Research Enhanced Index (REI) Equity Active ETFs maintain an index-like risk profile, but go beyond the constraints of passive strategies, backed by a global research platform that scours equity markets constantly in search of long-term value. We believe that every portfolio deserves more than just market returns; it deserves the extra edge that only true active insight can deliver. That’s the power of our REI Equity Active ETFs.

Bringing the benefits of active investing and the ETF vehicle to all major markets

Originating in the late 1980s from the need to bridge the gap between passive and active management, our REI process has evolved. Today, ETF investors can access low tracking error exposure to a broad range of 10 major equity indices and four custom sustainable Parisaligned benchmarks, while also tapping into the full breadth of J.P. Morgan’s equity research platform—one of the largest and most experienced in the industry. When combined with the cost, liquidity and pricing advantages of the ETF structure, our active REI ETFs provide powerful equity building blocks that can enhance the core of any investment portfolio.

What makes our REI ETFs different is our ability to combine the precision of passive index construction on the one hand, with the active stock-level ideas provided by our experienced team of equity analysts on the other. There are other enhanced index ETF strategies available, but few managers have access to the fundamental research expertise and deep active heritage needed to generate excess returns across market cycles. All while keeping tracking error consistently low, providing investors with reliable index exposure at the core of their portfolios.

Built on our fundamental research DNA; focused on stock-specific risk

Active stock-level research has always been key to our REI process. It’s in our DNA, and is reflected in our position as the biggest active UCITS ETF provider (Source: Bloomberg, as of 31 October 2025). For over 40 years, we’ve built up a formidable team of dedicated career analysts and portfolio managers, supported by an annual $190 million research budget to help them uncover investment opportunities and hidden risks. It’s this commitment to proprietary research that provides an information advantage that has endured through time, and which sets our REI ETFs apart from most other quant-based enhanced index ETFs.

Most enhanced index managers use the same quantitative tools and techniques that they use to minimise tracking error in portfolio construction, to also generate alpha. This approach means leaning into certain factors that automated quant valuation models suggest will be rewarded over time. However, even those factors that have worked well in the past will likely suffer periods of (sometimes sustained) underperformance.

By contrast, our REI ETFs target more consistent alpha generation by focusing on fundamental research. Regional, sector and style weights are still kept in line with the index, but rather than using quant models alone to drive stock selection, our REI ETFs take a diversified set of small active positions based on the fundamental analysis of our highly experienced team of 80+ in-house career research analysts (as of 30 June 2025), located in North America, Japan, Europe and emerging markets/Asia.

Incremental excess returns driven by our analyst research

What makes our analyst recommendations such a powerful alpha source is the scope of our coverage and the long-term focus of our fundamental research. Supported by a $190 million annual research budget, and the information provided by 5,000+ annual company visits, our analysts are able to maintain long-term return forecasts for around 2,500 stocks around the world.

These forecasts are based on estimates for normalised, long-term earnings. By focusing on normalised earnings, and comparing our estimates to today’s share prices, our analysts can look through short-term market noise to identify those companies that are fundamentally under- or over-valued, and therefore are most likely to outperform or underperform within their respective sectors and regions.

Over time, our fundamental research has provided a consistently strong alpha signal. The trick is to be able to maximise exposure to this signal at all times. We do this by ranking our analysts’ forecasts from highest to lowest, and then dividing these rankings into quintiles so that our REI Equity Active ETFs can target their overweight and underweight positions on the stocks that we believe have the highest or lowest long-term return potential. Overweights are focused on stocks that are ranked in the first and second quintiles (the ones that our analysts expect to have the highest long-term expected returns), while underweights are focused on stocks that are ranked in the fourth and fifth quintiles, which our research suggests will have the lowest long-term return potential.

However, our REI process doesn’t aim to generate excess returns by taking just a few active stock positions in a few sectors. Instead, our REI ETFs take hundreds of small overweight and underweight positions, spreading active risk over a broad range of stocks while keeping regional, sector and style exposures in line with their benchmarks. The aim is for around 70% of active risk in our REI portfolios to be driven by stock selection based on our fundamental research.

We find this approach, which focuses portfolio construction on our strength as active stock pickers, generates more consistent returns over time, maximising stock-specific bets where we have insight, while minimising unrewarded market, sector and style risks.

For investors, the result is a range of low tracking error, core equity ETFs that have the ability to deliver outperformance over a three- to five-year period.

Get the REI advantage

Our REI ETFs were the first fundamental low tracking error ETF suite available in the UCITS ETF market when they were launched back in 2018. Today, our REI ETFs are the largest active UCITS ETFs range, with over $32 billion in assets under management. They continue to redefine what is possible for core equity investors, offering costeffective, low active risk portfolio building blocks, with the alpha potential of J.P. Morgan’s fundamental research built in.

• Consistent, incremental alpha generation: By systematically incorporating insights from our fundamental stock research, our REI Equity Active ETFs have delivered consistent excess returns with low tracking error over time. Past performance should, of course, never be used as guide to future returns.
• A low tracking error approach: Our REI Equity Active ETF portfolios are constructed to closely mirror benchmark risk characteristics, minimising unintended risk exposures while capitalising on our global research and proprietary stock-level insights.
• Access to the benefits of the active ETF wrapper: Investors benefit from the transparency, liquidity, and operational efficiency of the ETF structure, with the added advantage of J.P. Morgan’s active research expertise.

By tapping into J.P. Morgan’s active DNA, our REI Equity Active ETFs offer a unique blend of passive reliability and active opportunity for all core equity allocations.