Should you consider adding JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) to your investment portfolio?

Overview of JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE)

Introduced on November 15, 2016, the JPMorgan Diversified Return U.S. Small Cap Equity ETF (JPSE) is a passively managed fund that aims to capture a wide range of U.S. small-cap blend stocks.

J.P. Morgan manages this ETF, which currently holds over $558 million in assets, positioning it as an average-sized fund within the small-cap blend category.

The Appeal of Small Cap Blend Investments

Investing in small-cap companies offers significant growth opportunities, but these firms—typically valued at under $2 billion—also carry increased risk.

Blend ETFs are so named because they include a combination of growth and value stocks, reflecting attributes of both investment styles.

Expense Considerations

When evaluating ETFs, it’s important to consider the expense ratio. Lower fees can enhance returns if all other factors are equal.

This ETF charges an annual expense ratio of 0.29%, which is in line with similar funds in the sector.

JPSE’s trailing 12-month dividend yield stands at 1.47%.

Sector Allocation and Major Holdings

Although ETFs provide diversification to reduce the impact of individual stock volatility, reviewing a fund’s holdings remains crucial. Most ETFs, including this one, offer daily transparency regarding their portfolios.

JPSE’s largest sector exposure is Industrials, making up about 12.5% of its assets. Information Technology and Real Estate are also significant components.

Among individual stocks, Compass Inc (COMP) represents roughly 0.57% of the fund, with Century Aluminum Co (CENX) and Hecla Mining Co (HL) following closely behind.

The top ten holdings collectively account for approximately 4.09% of the fund’s total assets.

Performance and Risk Profile

JPSE aims to replicate the performance of the Russell 2000 Diversified Factor Index, before fees and expenses. The underlying index uses a rules-based strategy that blends risk-focused portfolio construction with multi-factor selection, emphasizing value, quality, and momentum.

Year-to-date, the ETF has gained about 10.23%, and over the past year (as of 02/27/2026), it has risen approximately 22.75%. Its price has ranged from $38.20 to $55.20 in the last 52 weeks.

With a beta of 1.02 and a three-year standard deviation of 18.49%, JPSE offers broad diversification across 544 holdings, helping to mitigate company-specific risk.

Alternative ETF Options

JPSE holds a Zacks ETF Rank of 3 (Hold), based on factors such as expected returns, fees, and momentum. It is a solid choice for investors seeking exposure to the small-cap blend segment, but there are other notable options as well.

The Vanguard Small-Cap ETF (VB) and iShares Core S&P Small-Cap ETF (IJR) track similar indices. VB manages $74.59 billion in assets with a 0.03% expense ratio, while IJR oversees $96.99 billion and charges 0.06%.

Conclusion

Passively managed ETFs are increasingly favored by both institutional and individual investors due to their cost efficiency, transparency, flexibility, and tax advantages. They are well-suited for long-term investment strategies.