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

Nov 16th, 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 Small Cap Equity ETF (BBSC US).

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

JP Morgan’s ‘BetaBuilders’ ETFs are low cost, passively managed funds marketed as portfolio ‘building blocks’.

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

It comes with an expense ratio of 0.09%.

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

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

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

The suite has aroused comment in ETF circles by offering core portfolio exposures at rock-bottom fees. 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.

The firm has also been able to leverage its brand strength and existing client base, including internally directed funds, to generate traction for the funds with several swiftly surpassing $1 billion in assets under management.

As more investors seek out low-cost passive exposures, however, the market has become increasingly competitive. In April, BNY Mellon began offering its own 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) and the BNY Mellon US Small Cap Core Equity ETF (BKSE US) both cost 0.04%.

Other low-cost US small-cap ETFs include the $11.4bn Schwab US Small-Cap ETF (SCHA US), which also comes with an expense ratio of 0.04%, the $33.2bn Vanguard Small-Cap ETF (VB US) and $2.9bn SPDR Portfolio S&P 600 Small Cap ETF (SPSM US) which have expense ratios of 0.05%, and the $50bn iShares Core S&P Small-Cap ETF (IJR US), which costs 0.06%.

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