The JPMorgan Diversified Return Emerging Markets Equity ETF (JPEM) made its debut on 01/07/2015, and is a smart beta exchange traded fund that provides broad exposure to the Broad Emerging Market ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Because the fund has amassed over $349.73 million, this makes it one of the average sized ETFs in the Broad Emerging Market ETFs. JPEM is managed by J.P. Morgan. Before fees and expenses, this particular fund seeks to match the performance of the FTSE Emerging Diversified Factor Index.
The JP Morgan Diversified Factor Emerging Markets Equity Index reflects the performance of emerging market securities representing a diversified set of factor characteristics which include Value, Price, Momentum, Earnings, Revisions and Quality characteristics.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for JPEM are 0.44%, which makes it on par with most peer products in the space.
JPEM's 12-month trailing dividend yield is 4.81%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, China Construction Bank accounts for about 1.5% of total assets, followed by Taiwan Semiconductor and Infosys Ltd Common Stock (INFY_D.).
Its top 10 holdings account for approximately 10.13% of JPEM's total assets under management.
Performance and Risk
The ETF return is roughly 15.84% so far this year and is up roughly 9.96% in the last one year (as of 09/26/2025). In the past 52-week period, it has traded between $48.41 and $59.87
The fund has a beta of 0.52 and standard deviation of 12.41% for the trailing three-year period, which makes JPEM a medium risk choice in this particular space. With about 567 holdings, it effectively diversifies company-specific risk .
Alternatives
JPMorgan Diversified Return Emerging Markets Equity ETF is a reasonable option for investors seeking to outperform the Broad Emerging Market ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard FTSE Emerging Markets ETF (VWO) tracks FTSE Emerging Markets All Cap China A Inclusion Index and the iShares Core MSCI Emerging Markets ETF (IEMG) tracks MSCI Emerging Markets Investable Market Index. Vanguard FTSE Emerging Markets ETF has $100.55 billion in assets, iShares Core MSCI Emerging Markets ETF has $109.23 billion. VWO has an expense ratio of 0.07% and IEMG changes 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Broad Emerging Market ETFs
Bottom Line
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 Emerging Markets Equity ETF (JPEM): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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