JPMorgan Diversified Return U.S. Small Cap Equity ETF

JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) is an index fund that owns small U.S. companies, picked mainly from the Russell 2000 for value, momentum and quality traits. It spreads risk evenly across sectors and stocks: as of July 31, 2026, it held 559 stocks, and the top 10 made up just 3.79% of assets. The tradeoff is cost. Its 0.29% expense ratio is well above the 0.11% average of similar small-cap funds.

• Over the year to Oct 27, 2026, JPSE returned +15.9%, 6th of 9 among similar funds.
• Its 5-year annualized return was +7.1%.
• In the 2020 COVID crash it fell 42.2% and regained its old high 7.7 months after the low.
• Its worst full calendar year was 2022 (-14.4%); its best was 2021 (+29.3%).
• The deepest fall in its price history was 43% (Jan 16, 2020 to Mar 23, 2020), recovered by Nov 16, 2020.

As of Jul 31, 2026, the fund held 559 securities; the ten largest made up 3.79% of assets, and 2.65% sat in cash and money-market holdings.

• Over the three months to Jul 31, 2026, investors withdrew a net $12.9M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +0.30%, +4.47%, -1.41%.

JPSE tracks the JP Morgan Diversified Factor US Small Cap Equity Index. The fund's adviser created the index and its scoring rules. FTSE International Limited calculates and runs it. Most stocks come from the Russell 2000, a widely used index of small U.S. companies. Each stock is scored against its sector peers on three "factors," or traits, and each trait counts equally. Value looks for low prices relative to book value, earnings, dividends and cash flow. Momentum looks for strong 12-month returns, adjusted for how bumpy those returns were. Quality looks for profitability, reliable earnings and financial strength.

The Russell 2000 gives bigger companies more weight. This index doesn't. It adjusts each sector's weight based on how volatile that sector has been, so that no single sector drives most of the fund's swings. It also spreads money widely across individual stocks. As of January 30, 2026, the index held 534 companies, worth between $125.1 million and $17.6 billion each. The fund can own common stock, preferred shares and real estate investment trusts (REITs).

The fund is passive. It aims to hold the index's stocks in roughly the same weights. When that isn't practical, it may hold a representative sample, but it must keep at least 80% of assets in index securities. It rebalances every quarter, and its portfolio turnover was 27%. It may put up to 10% of assets in exchange-traded futures. It doesn't move into cash when markets fall.

• JPSE charges 0.29% a year, versus an average of 0.11% for the similar funds below (8th of 9, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $30 in the first year and $368 over 10 years (assuming a 5% annual return).

It adds factor-screened small U.S. companies to a portfolio built mostly on large companies, but its sharp past declines argue against making it the core.

JPSE could add small-company exposure alongside a large-cap core, but its declines have been steep. In the 2020 COVID crash, it fell 42.2% in about five weeks. It regained its prior high by November 2020. In the 2022 bear market, it dropped 24% and did not recover until March 28, 2024. Its worst calendar year was 2022, at -14.4%. Anyone who had to sell shares or draw cash during those stretches would have locked in losses. The fund launched in November 2016, so it has no record from the 2008 crisis. Income is modest: the trailing 12-month yield was 1.42% as of October 27, 2026, paid quarterly. In the SEC's standard example, its 0.29% expense ratio comes to about $30 in the first year on $10,000. Past results don't predict future ones, and a plan should look at the whole portfolio, not one fund.

Matched by holdings overlap from the latest N-PORT reports.