ETF Watch: JPMorgan Adds Small Cap Fund

Firm expands its smart-beta ‘Diversified Return’ ETF family, filling a hole in coverage.
Reviewed by: Staff
Edited by: Staff

Today J.P. Morgan filled a hole in the investment coverage offered by its growing family of “Diversified Return” multifactor ETFs with the addition of a U.S. small-cap fund. The JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) launched on the NYSE Arca and joins a family of nine other funds marketed under that brand name.

It comes with an expense ratio of 0.39%.

JPSE’s benchmark is based on the well-known Russell 2000, which serves as the selection universe. The methodology selects companies for their exposure to the relative valuation, momentum and quality factors, looking to exclude companies that do not demonstrate sufficient exposure. It also has provisions to distribute risk evenly across sectors and individual stocks in order to avoid any buildup of risk in a single area, the prospectus said.

It also noted that the fund’s components as of the end of October were as small as $7.8 million and as large as $8 billion in market capitalization.

ETF Securities Plans 6 Funds

ETF Securities has filed for six actively managed ETFs that will invest in commodity futures via a Cayman Islands-based subsidiary and also manage a fixed-income and cash equivalent portfolio state-side. The six ETFs are part of a wave of recent commodity ETF filings that are “K-1 free,” meaning that the offshore subsidiary allows investors to avoid having to fill out K-1 forms for their taxes each year.

As with other similarly structured ETFs, the funds may invest up to 25% of their portfolios in their respective offshore subsisidiaries.

The ETFS Bloomberg All Commodity ETF (BCI) will seek to outperform the Bloomberg Commodities Index, but will still look to hold a similar portfolio. The benchmark covers 22 commodity contracts weighted based on their liquidity and production data.

The ETFS Bloomberg All Commodity Longer Dated ETF (BCD) is benchmarked against the Bloomberg All Commodity Index 3 Month Forward Index, which is similar to the Bloomberg Commodity Index. but represents a rolling position in different commodity futures with maturities of four to six months.

The ETFS Bloomberg Agriculture ETF (AGRI) uses the Bloomberg Agriculture Index, a subset of the Bloomberg Commodity Index, as its benchmark. The index covers contracts maturing within one to three months for wheat, corn, soybeans, sugar, cotton, coffee, soybean oil and soybean meal.

The ETFS Bloomberg Energy ETF is benchmarked to another subset of the broad Bloomberg Commodity Index. The index covers contracts on natural gas, WTI crude oil, brent crude, gasoline and heating oil.

The ETFS Bloomberg Energy Longer Dated ETF is similar to the previously mentioned energy commodity ETF in terms of what it covers, but the futures contracts have a maturity of four to six months, instead of one to three months.              

Finally, the ETFS Commodity Long-Short ETF (MLSC) will be benchmarked against a yet-to-be-named index that uses momentum to determine if it will take a long, short or flat position in a particular commodity.

The filing did not include expense ratios or indicate where the funds would list.

Contact Heather Bell at [email protected].


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