How This JPMorgan Factor Fund Keeps Up With the Broad Market
The JPMorgan U.S. Quality Factor ETF picks stocks based on profitability criteria and boasts a similar return as the S&P 500 but with less volatility.
![outside of J.P. Morgan headquarters in London](https://cdn.mos.cms.futurecdn.net/iSiCJM3K8FfoBNfTkjhdHe-415-80.jpg)
Factor funds can be tricky. These funds, which aim to capitalize on certain market attributes or themes, don't always seem to work if the market moves too quickly.
But we've noticed something about the JPMorgan U.S. Quality Factor (JQUA) fund, a member of the Kiplinger ETF 20, our favorite cheap ETFs you can buy. The exchange-traded fund has kept pace with the S&P 500 index over most time frames, and it has been a smidge less volatile. Over the past five years, the fund's 13.3% annualized return eked past the 13.2% gain in iShares Core S&P 500 (SPY), an S&P 500 index ETF, with less volatility.
What's the difference between the two funds? The iShares ETF holds all of the large-company stocks in the S&P 500, which are picked by a committee at S&P Dow Jones Indices. The selection process favors companies that meet certain criteria, such as company size, positive earnings and a sufficient percentage of shares available for public trading.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But JPMorgan U.S. Quality Factor ETF holds just 250-odd stocks and starts with a broader index, the Russell 1000, which means more midsize firms are in the mix. Companies in the Quality Factor fund have an average market value of $112 billion, according to financial data firm Morningstar. (By contrast, stocks in the Core S&P 500 ETF have an average market value more than double that, $278 billion.)
Finally, companies in the Quality Factor ETF must pass muster for a variety of profitability criteria (such as return on equity), solvency (such as cash flow relative to debt) and earnings quality (such as the ratio of a firm's balance sheet to its average total assets over the past year).
Despite their differences, the two funds share similar top-10 holdings, including some of the usual suspects: Meta Platforms (META), Alphabet (GOOGL), Nvidia (NVDA) and Microsoft (MSFT). But about one-third of the holdings in U.S. Quality Factor ETF aren't in the S&P 500 index. Some of those stocks, including home goods retailer Williams-Sonoma (WSM) and cybersecurity software maker CrowdStrike Holdings (CRWD), have more than doubled in price over the past 12 months.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.
-
Stock Market Today: Stocks Give Up Gains Even as Inflation Ebbs
The main indexes closed lower Friday but ended the first half with impressive gains.
By Karee Venema Published
-
Best Places to Rent 2024 — How Does Your City Rank?
The best places to rent in the U.S. include Miami, suburban Chicago and North Jersey, according to a new survey from RentCafe.
By Kathryn Pomroy Published
-
Stock Market Today: Stocks Give Up Gains Even as Inflation Ebbs
The main indexes closed lower Friday but ended the first half with impressive gains.
By Karee Venema Published
-
Nokia to Acquire Infinera in $2.3 Billion Deal: What to Know
Nokia will acquire Infinera as it looks to expand its optical-networking presence. Here's what you need to know.
By Joey Solitro Published
-
Trump Media & Technology Stock Stays Volatile After Debate
Trump Media & Technology stock has traded erratically in recent months and last night's presidential debate sparked more volatility in DJT shares.
By Joey Solitro Published
-
Nike Stock Sinks on Dismal Sales Forecast: What to Know
Nike stock is spiraling Friday after the athletic and apparel retailer missed sales estimates for its most recent quarter and lowered its outlook for its new fiscal year.
By Joey Solitro Published
-
Stock Market Today: Stocks End Higher Ahead of May PCE Data
Micron Technology, Walgreens Boots Alliance and Levi's were three of Thursday's biggest movers.
By Karee Venema Published
-
How to Find the Best Small-Cap Stocks to Buy
Wall Street's best small-cap stocks to buy include biotech, real estate and industrials names.
By Dan Burrows Published
-
Levi Strauss Stock Spirals on Revenue Miss: What to Know
Levi Strauss stock is lower Thursday after the denim company's top line missed estimates amid a "cautious" consumer environment.
By Joey Solitro Published
-
Walgreens Stock Hits 27-Year Low After Massive Earnings Miss
Walgreens Boots Alliance stock is tanking Thursday the pharmacy retailer came up short of earnings expectations and slashed its full-year outlook. Here's what you need to know.
By Joey Solitro Published