The relatively new JPMorgan Global Select Equity ETF (NASDAQ:JGLO) from JPMorgan Chase & Co (NYSE:JPM) seeks to leverage the blue-chip firm’s “best ideas” to provide investors with an attractive investment opportunity.
While index investing has come to dominate the market in recent decades, there is still a place for active management and stock picking. JGLO delivers investors high-conviction “best ideas” from across its extensive, worldwide network of research analysts all in one convenient ETF.
I’m bullish on this new $3.4 billion ETF based on its strong performance since launching in the latter half of last year, the collective wisdom of the 80+ research analysts it sources ideas from, and its experienced portfolio management team. I also like the ETF’s diversification across sectors and the fact that it gives U.S. investors exposure to a mix of high-conviction investment picks from around the world in addition to blue-chip U.S. stocks.
What Is the JGLO ETF’s Strategy?
JGLO’s strategy is simple yet intriguing. JPMorgan explains, “Seeking to invest in our best ideas globally, JGLO is designed to provide long-term capital appreciation through a global equity portfolio.”
JGLO attempts to leverage the breadth and depth of the renowned asset management firm’s talent and large worldwide presence to invest in what the firm sees as the best investment opportunities in the market.
To uncover these best ideas, JGLO draws on the “Insights of 80+ research analysts globally covering 2,500+ companies, averaging 19 years of industry experience.” Furthermore, JGLO’s team of experienced portfolio managers collectively boast over 50 years of industry experience. Essentially, investing in JGLO is investing in the powerful hive mind of this massive network of research analysts and investment managers.
This collaborative approach results in a portfolio of “high conviction, bottom-up… best ideas” and stocks with “higher quality earnings growth at a lower valuation.” The fund also seeks to “maintain regional geographic and sector exposures similar to the MSCI World Index.”
JGLO launched last September but has already become a popular ETF with $3.4 billion in assets under management (AUM), likely in part due to the attractiveness of this strategy and JPMorgan’s reputation as a blue-chip asset management firm.
The launch of this new actively-managed ETF shows that JPMorgan leaning further into this strategy, as it has had recent success with the income-focused JPMorgan Equity Premium Income ETF (NYSEARCA:JEPI). JEPI is now the market’s largest actively-managed ETF with $33.6 billion in AUM, and the JPMorgan NASDAQ Equity Premium ETF (NASDAQ:JEPQ) is no slouch itself, with $15.3 billion in AUM.
High-Conviction Holdings
So what does a portfolio of these best ideas from around the world look like in practice? JGLO will typically invest in 70-100 of these high-conviction ideas. The fund currently holds 70 stocks, and its top 10 holdings account for 41.5% of assets.
JGLO owns plenty of the tried-and-true, perhaps obvious household names like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Nvidia (NASDAQ:NVDA).
But JGLO doesn’t simply invest in these ubiquitous large-cap tech stocks that you’ll find in just about any basic index fund. For example, JGLO’s top 10 holdings also include Swiss consumer staples giant Nestle (OTC:NSRGY), Japanese chemical maker Shin-Etsu Chemical Co. (OTC:SHECF), French luxury conglomerate LVMH Moet Hennessey Luis Vuitton SE (OTC:LVMUY), and German reinsurer insurer Munich Reinsurance (DE:MUV2).
The company scours the world to find these stocks, and it thus offers investors a bit of geographic diversification. The United States accounts for a weighting of 69.9%, but the remaining 30.1% of the portfolio gives investors exposure to markets in Asia, Europe and Latin America, making it a good way for U.S. investors to gain diversified exposure to some top ideas globally using one ETF.
The fund is also fairly well-diversified by sector exposure. Information Technology has a relatively large weighting of 28.2%, followed by Financials and Consumer Discretionary, which have weightings of 13.3% and 13.2%, respectively, but no other sector accounts for a double-digit weighting.
Overall, I like the way that JGLO gives investors a combination of exposure to tried and true blue-chip, large-cap U.S. stocks and other stocks from around the world that don’t always get the same attention from U.S. investors.
Strong Performance Out of the Gate
The fund is relatively new. It only launched on September 12, 2023, so it hasn’t had much time to compile a real track record yet. However, it has performed well so far, gaining an impressive 28.2% since inception.
What Is JGLO’s Expense Ratio?
JGLO charges an expense ratio of 0.47%. This is somewhat expensive but not necessarily unreasonable for an actively managed ETF employing this type of strategy. This expense ratio means that for every $10,000 invested, an investor will pay $47 in fees annually.
Are There Risks?
While the ETF certainly looks promising, it’s always important to remember that no investment is without risks. As discussed above, JGLO has not been around for long, so its strategy is unproven, and we don’t know how it will fare under different market conditions. Additionally, while I like the fund’s approach of choosing high-conviction ideas from its network of analysts, there’s no guarantee that these picks will perform well.
Is JGLO Stock a Buy, According to Analysts?
Turning to Wall Street, JGLO earns a Moderate Buy consensus rating based on 61 Buys, nine Holds, and zero Sell ratings assigned in the past three months. The average JGLO stock price target of $67.51 implies 8.8% upside potential from current levels.
Power of the Hive Mind
While it’s still in its early days, I’m bullish on the JGLO ETF based on its strong performance thus far.
I’m also bullish on JGLO based on the power of the “hive mind” and the process in which it leverages the collective strength of JPMorgan’s analysts, who take a list of thousands of stocks from around the globe and narrow it down to a list of 70-100 high-conviction ideas.
The ETF is also fairly well-diversified by sector and gives U.S. investors a bit of geographic diversification as well, making it an intriguing option for inclusion in investor portfolios.
