JP Morgan expands ‘BetaBuilders’ suite with US mid-cap equity ETF

Apr 15th, 2020 | By | Category: Equities

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JP Morgan Asset Management has added to its ‘BetaBuilders’ suite of low-cost, passively managed ETFs with the launch of the JPMorgan BetaBuilders US Mid Cap Equity ETF (BBMC US).

JP Morgan expands ‘BetaBuilders’ suite with US mid-cap ETF

JP Morgan now offers nine funds within its BetaBuilders suite.

The fund, which has listed on NYSE Arca, provides investors with liquid, cost-effective access to mid-cap equities trading in the US.

It comes with an expense ratio of 0.07%.

According to data from Bloomberg, the ETF was scheduled to launch on 18 March 2020; however, the severe volatility plaguing markets at that time likely led JP Morgan to hold back the release.

The fund is linked to the Morningstar US Mid Cap Target Market Exposure Extended Index which consists of common stocks, preferred stocks, and real estate investment trusts (REITs) that fall between the seventy-fifth and eighty-fifth percentiles when ranking the US equity universe by full market capitalization.

To be eligible for inclusion, securities must also fall in the top 75% by trading volume and turnover to ensure investability and ease of tracking.

Constituents are weighted by float-adjusted market cap. The index is rebalanced on a quarterly basis and includes buffers to limit unnecessary turnover.

The fund expands JPMorgan’s BetaBuilders suite to nine. The existing ETFs provide exposure to broad US, international developed, European, Japanese, developed Asia ex-Japan, and Canadian equity markets as well as US-listed REITs and USD-denominated bonds.

JP Morgan’s BetaBuilders ETFs have caused a stir in the industry by offering core portfolio exposures at bargain prices. In March 2019, the firm launched the broad market JPMorgan BetaBuilders US Equity ETF (BBUS US) with an expense ratio of just 0.02%, a new low for the ETF industry.

JP Morgan has also been able to leverage its brand strength and existing client base (internally managed funds) to generate interest in the funds with several of the ETFs swiftly surpassing $1 billion in assets under management.

As more investors seek out low-cost passive exposures, however, the market has become increasingly competitive. Just this week, BNY Mellon began offering its own ETFs by launching a trio of ultra-low-cost ETFs, including a zero-fee fund, targeting the three main size segments of the US equity market.

The BNY Mellon US Large Cap Core Equity ETF (BKLC US) comes with an expense ratio of zero, while the BNY Mellon US Mid Cap Core Equity ETF (BKMC US) costs 0.04%. Both funds are also linked to Morningstar indices.

Other low-cost US mid-cap ETFs include the $26bn Vanguard Mid-Cap ETF (VO US) and the $5bn Schwab US Mid-Cap ETF (SCHM US), both of which come with expense ratios of 0.04%.

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