The JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) was launched on November 15, 2016, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by J.P. Morgan. It has amassed assets over $492.87 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.29%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.6%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 13% of the portfolio. Information Technology and Real Estate round out the top three.
Looking at individual holdings, Jpmorgan Us Govt Mmkt Fun accounts for about 0.41% of total assets, followed by Commscope Holding Co Inc (COMM) and Enova International Inc (ENVA).
The top 10 holdings account for about 3.61% of total assets under management.
Performance and Risk
JPSE seeks to match the performance of the Russell 2000 Diversified Factor Index before fees and expenses. The JP Morgan Diversified Factor US Small Cap Equity Index utilizes a rules-based approach that combines risk-based portfolio construction with multi-factor security selection, including value, quality and momentum factors.
The ETF has gained about 2.55% so far this year and is up about 4.6% in the last one year (as of 08/22/2025). In the past 52-week period, it has traded between $38.20 and $51.70.
The ETF has a beta of 1.03 and standard deviation of 20.02% for the trailing three-year period. With about 558 holdings, it effectively diversifies company-specific risk.
Alternatives
JPMorgan Diversified Return U.S. Small Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, JPSE is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Small-Cap ETF (VB) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While Vanguard Small-Cap ETF has $64.36 billion in assets, iShares Core S&P Small-Cap ETF has $82.23 billion. VB has an expense ratio of 0.05% and IJR charges 0.06%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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