New York, NY – Investors looking for quality investments may find the JPMorgan U.S. Quality Factor ETF (JQUA) an appealing option to consider. This ETF has been closely tracking the JP Morgan US Quality Factor Index since November 8, 2017, with a portfolio consisting of 259 holdings. With a 30-day SEC yield of 1.30% and a low expense ratio of 0.12%, JQUA offers investors a chance to potentially benefit from higher quality companies in the market.

According to JPMorgan’s prospectus, the underlying index of JQUA selects equities in the Russell 1000 Index based on a quality factor that identifies companies with strong profitability, quality of earnings, and solvency. The portfolio is designed to be well-diversified, with a turnover rate of 21% in the most recent fiscal year. Compared to its parent index, the Russell 1000, represented by the iShares Russell 1000 ETF (IWB), JQUA features a similar sector breakdown but moderately overweights certain sectors like consumer discretionary and industrials.

The fund primarily invests in U.S. companies, with a focus on large and mega-cap stocks comprising over 99% of its asset value. The sector allocation shows an overweight position in information technology and communication services, while other sectors make up less than 15% of the portfolio. The top 10 holdings account for 21.8% of the fund’s total asset value, with the heaviest weighting at around 3%.

When comparing JQUA to its parent index and other quality ETFs on the market, the fund’s performance has been relatively resilient, with a slightly lower volatility and a marginally higher Sharpe ratio. This performance difference has shown in the 2022 correction and over the past three years, with JQUA outperforming its parent index by 60 basis points in annualized return.

Despite its strong performance, investors should be aware of the exposure to risky stocks within the JQUA portfolio, which currently sits at 8.3% of the total asset value. However, based on various quality metrics such as Altman Z-score, Piotroski F-score, and return on assets, JQUA’s portfolio quality stands out as significantly superior to the Russell 1000 index.

In conclusion, JPMorgan U.S. Quality Factor ETF may offer investors a chance to access higher quality companies in the market with the potential for strong performance compared to its competitors and benchmarks. While historical performance has been positive, investors should consider the fund’s exposure to technology and the potential impact of market downturns on its performance.