Should JPMorgan BetaBuilders U.S. Small Cap Equity ETF (BBSC) Be on Your Investing Radar?
Style Box ETF report for BBSC
Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the JPMorgan BetaBuilders U.S. Small Cap Equity ETF (BBSC - Free Report) is a passively managed exchange traded fund launched on 11/16/2020.The fund is sponsored by J.P. Morgan.
It has amassed assets over $516.90 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.Why Small Cap ValueSitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.CostsSince cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.Annual operating expenses for this ETF are 0.09%, making it one of the least expensive products in the space.It has a 12-month trailing dividend yield of 1.42%.Sector Exposure and Top HoldingsEven 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.This ETF has heaviest allocation to the Financials sector--about 18.80% of the portfolio. Industrials and Healthcare round out the top three.Looking at individual holdings, Jpmorgan Us Govt Mmkt Fun accounts for about 2.21% of total assets, followed by Karuna Therapeutics Inc (KRTX - Free Report) and Chord Energy Corp Common (CHRD - Free Report) .The top 10 holdings account for about 5.39% of total assets under management.Performance and RiskBBSC seeks to match the performance of the MORNINGSTAR US SML CP TRG MRK EXP EXT ID before fees and expenses. The Morningstar US Small Cap Target Market Exposure Extended Index is a free-float adjusted, market-cap weighted index that targets small cap securities traded in the U.S.The ETF has lost about -20.68% so far this year and is down about -19.53% in the last one year (as of 12/26/2022).
In the past 52-week period, it has traded between $48.73 and $66.66.The ETF has a beta of 0.98 and standard deviation of 24.65% for the trailing three-year period. With about 906 holdings, it effectively diversifies company-specific risk.AlternativesJPMorgan BetaBuilders U.S. Small Cap Equity ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors.
Thus, BBSC is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.The iShares Russell 2000 Value ETF (IWN - Free Report) and the Vanguard SmallCap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.94 billion in assets, Vanguard SmallCap Value ETF has $23.76 billion.
IWN has an expense ratio of 0.23% and VBR charges 0.07%.Bottom-LineRetail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.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.