FUND STORY | MARCH 31, 2017
JPMorgan Diversified Return Emerging Markets
Equity ETF
Ticker: JPEM
Seeking a smoother ride in emerging market equities.
JPEM tracks an index whose methodology is designed to capture market upside while providing less
volatility in down markets compared to a market cap-weighted index.
EXPERTISE
PORTFOLIO
SUCCESS
•
•
•
Combines decades of J.P. Morgan’s proven
research and insights with FTSE Russell, a leader
in global index construction.
GROWTH OF $100,000 SINCE INCEPTION (in thousands)
JPEM tracks an index that aims to deliver higher
risk-adjusted returns than a traditional market
cap-weighted index through broad diversification
of risk across regions and sectors.
$110
The index uses a multi-factor stock screening process
that has historically driven strong performance.
$130
Average annual return
$120
JPEM at NAV
15.84%
JPEM at market price 17.35%
Cap-weighted
17.54%
1 year
Inception
3/31/171
2.63%
2.86%
3.04%
$105,957
—
$106,921
$100
$90
$80
$70
1/7/15
2016
3/17
Chart source: FTSE Russell, Morningstar, J.P. Morgan Asset Management; as of 3/31/17. Chart represents growth of $100,000 since JPEM inception on 1/7/15. Total cumulative value at
3/31/17. Cap-weighted refers to the parent index of the Fund, FTSE Emerging Net Index. Performance quoted is past performance and is no guarantee of future results. Investment
returns and principal value will fluctuate, so shares, when sold, may be worth more or less than original cost. Current performance may be higher or lower than returns shown. Call
1-844-4JPM-ETF for most recent month-end performance.
1
MORE THAN THE SUM OF ITS PARTS
BUILDING A STRATEGIC BETA INDEX
The index seeks to improve risk-adjusted returns by addressing the
inherent weaknesses in market cap-weighted investing: overexposure
to risk concentrations and overvalued securities.
The Fund tracks a disciplined, two-part index methodology:
START
•
Security selection — screens stocks based on factors — including
value, quality and momentum — that have historically driven
strong performance. When these factors are combined, risk and
return outcomes can be improved.
RESULT
Market CapWeighted Index
Portfolio
Construction
Security
Selection
Strategic Beta
Index
FTSE Emerging
Index
Risk weighting
Multi-factor
stock screen
FTSE Emerging
Diversified
Factor Index
900+ securities
■
•
Portfolio construction — strategically diversifies risk through a
risk-weighting process that results in lower exposure to historically
volatile regions and sectors.
PROCESS
Regions and
sectors weighted by
inverse of trailing
3-year volatility
+
Rank each
company within
sectors based on
combination of
three return factors
=
500-650
securities
Chart shown for illustrative purposes only. The manager seeks to achieve the stated objectives. There is no guarantee those objectives will be met.
DIVERSIFYING RISK FOR THE LONG TERM
Whereas traditional market cap-weighted funds allow market cap to
dictate allocations, the strategic beta index seeks to minimize exposure
to unrewarded sector risk concentrations, thereby avoiding overconcentration in regions and sectors that have historically had higher risk,
such as the China/India/Pakistan region today. JPEM may offer a lower
volatility emerging markets equity option by tracking an index that more
evenly distributes risk, enabling clients to get invested — and stay invested.
CHINA/INDIA/PAKISTAN REGIONAL EXPOSURE
31%
Strategic beta
38%
Cap-weighted
Chart source: J.P. Morgan Asset Management; as of 3/31/17. Shown for illustrative purposes only. Cap-weighted represented by the FTSE Emerging Index; strategic beta
represented by the FTSE Emerging Diversified Factor Index. China/India/Pakistan is chosen as an illustrative example of the Fund’s regional allocations.
PAGE 2 OF 2 | FUND STORY | MARCH 31, 2017
• Dedicated team led by Dr. Yazann Romahi, CIO
of Quantitative Beta Strategies, with expertise in
quantitative investing and risk management.
JPMorgan Diversified Return Emerging Markets Equity ETF
Yazann Romahi, PhD, CFA
• Combines J.P. Morgan’s proprietary research and
insights with FTSE Russell, a leader in global index
construction.
Albert Chuang
Portfolio manager
• 17 years of
industry
experience, 13 at
J.P. Morgan
Joe Staines
Portfolio manager
• 4 years of
industry
experience, all at
J.P. Morgan
RETURN (%)
TOTAL RETURN
AVERAGE ANNUAL RETURN
3 mos
YTD
1 yr
3 yrs
5 yrs
JPEM at NAV
10.08
10.08
15.84
N/A
N/A
2.63
JPEM Market Price Returns
9.95
9.95
17.35
N/A
N/A
2.86
9.79
9.79
16.48
N/A
N/A
3.79
10.18
10.18
17.54
N/A
N/A
3.04
Market Cap-Weighted Index
4
Inception2
ANNUAL EXPENSES (%)
Gross expenses
Net expenses
1.97
0.51
GENERAL DISCLOSURES
Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to
obtain a prospectus. Carefully consider the investment
objectives and risks as well as charges and expenses
of the ETF before investing. The summary and full
prospectuses contain this and other information about
the ETF. Read them carefully before investing.
This document is a general communication being provided
for informational purposes only. It is educational in nature
and not designed to be a recommendation for any specific
investment product, strategy, plan feature or other
purpose. Any examples used are generic, hypothetical
and for illustration purposes only. Prior to making any
investment or financial decisions, an investor should seek
individualized advice from personal financial, legal, tax
and other professional advisors that take into account all
of the particular facts and circumstances of an investor’s
own situation.
RISK SUMMARY
•Investing involves risk, including possible loss of principal.
Investment returns and principal value of an investment
will fluctuate so that an investor’s shares, when sold or
redeemed,may be worth more or less than their original
cost. ETF shares are bought and sold throughout the
day on an exchange at market price (not NAV) through a
brokerage account, and are not individually redeemed
from the fund. Shares may only be redeemed directly
from a fund by Authorized Participants, in very large
creation/redemption units. For all products, brokerage
commissions will reduce returns.
•International investing involves a greater degree of risk and
increased volatility. Changes in currency exchange rates
and differences in accounting and taxation policies outside
the U.S. can raise or lower returns. Also, some overseas
markets may not be as politically and economically stable
as the United States and other nations.
•Narrowly focused investments typically exhibit higher
volatility.
•Emerging markets involve heightened risks related
to the same factors as well as increased volatility and
decreased trading volume.
•The Fund uses derivatives, which may be riskier than
other types of investments and may increase the
volatility of a fund.
•The Fund may not track the return of its underlying index
for a number of reasons, such as operating expenses
incurred by a fund that are not applicable to an index,
and the time difference between calculating the value of
an index and the net asset value of a fund.
•There is no guarantee the Fund will meet its investment
objective.
•Diversification may not protect against market loss.
ANNUAL OPERATING EXPENSES
The Fund’s adviser and/or its affiliates have contractually
agreed to waive fees and/or reimburse expenses to the
extent Total Annual Fund Operating Expenses (excluding
acquired fund fees and expenses, dividend and interest
expenses related to short sales, interest, taxes, expenses
related to litigation and potential litigation and
extraordinary expenses) exceed 0.45% of the average
daily net assets. The Fund may invest in one or more
money market funds advised by the adviser or its affiliates
(affiliated money market funds). The Fund’s adviser has
contractually agreed to waive fees and/or reimburse
expenses in an amount sufficient to offset the fees and
expenses of the affiliated money market funds incurred by
the Fund because of the Fund’s investment in such money
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE
Portfolio manager
• 6 years of
industry
experience,
all at J.P. Morgan
Kartik Aiyar
Portfolio manager
• 2 years of
industry
experience, all at
J.P. Morgan
Strategic Beta Index3
Naveen Kumar
Portfolio manager
• 6 years of
industry
experience,
all at J.P. Morgan
Performance quoted is past performance and
is no guarantee of future results. Investment
returns and principal value will fluctuate, so
shares, when sold, may be worth more or less
than original cost. Current performance may
be higher or lower than returns shown. Call
1-844-4JPM-ETF for most recent month-end
performance.
Since inception: 1/7/15.
FTSE Emerging Diversified Factor Index (net of
foreign withholding taxes).
4
FTSE Emerging Net Index.
Total Returns based on NAV and Market Price
do not reflect brokerage commissions or sales
charges in connection with the purchase or sale
of Fund shares, which if included would lower the
performance. The NAV used in the Total Return
calculation assumes all management fees and
operating expenses incurred by the Fund.
A fund’s NAV is the sum of all its assets less
any liabilities, divided by the number of shares
outstanding. The market price is the most recent
price at which the fund was traded.
ETFs are bought and sold at market price, and
market price/returns are based upon the midpoint
of the bid/ask spread at 4:00 p.m. (when NAV is
normally determined for most ETFs), and do not
represent the returns an investor would receive if
shares were traded at other times.
2
3
market funds. This waiver is in effect through 2/29/2020,
at which time the adviser and/or its affiliates will
determine whether to renew or revise it. The difference
between net and gross fees includes all applicable fee
waivers and expense reimbursements.
INDEXES
Index returns are for illustrative purposes only. ETFs
have fees that reduce their performance; indexes do not.
You cannot invest directly in an index.
All rights in the FTSE Indexes (the “Indexes”) vest in FTSE
International Limited (“FTSE”). “FTSE®” is a trademark of
the London Stock Exchange Group companies and is used
by FTSE under license. The Funds have been developed
solely by J.P. Morgan. The Indexes are calculated by FTSE
or its agent. FTSE and its licensors are not connected
to and do not sponsor, advise, recommend, endorse
or promote the Funds and do not accept any liability
whatsoever to any person arising out of (a) the use of,
reliance on or any error in the Index or (b) investment in or
operation of the Funds. FTSE makes no claim, prediction,
warranty or representation either as to the results to be
obtained from the Funds or the suitability of the Indexes
for the purpose to which it is being put by J.P. Morgan.
ENTITIES
©2017, Morningstar, Inc. All rights reserved.
J.P. Morgan Exchange-Traded Funds are distributed by
SEI Investments Distribution Co, One Freedom Valley Dr.,
Oaks, PA 19456, which is not affiliated with JPMorgan
Chase & Co. or any of its affiliates.
J.P. Morgan Asset Management is the marketing name for the
asset management business of JPMorgan Chase & Co. and its
affiliates worldwide.
STO-JPEM | 3/17