JGLO Beats Its Benchmark And Other Global Equity ETFs

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JGLO strategy

JPMorgan Global Select Equity ETF (NASDAQ:JGLO) is an actively managed ETF launched on 09/13/2023. It has 74 holdings, a 30-day SEC yield of 1.09% and a total expense ratio of 0.47%.

As described by JPMorgan, JGLO invests in “companies that are attractively valued, possess strong free cash flow and have the potential for sustained earnings growth”. The fund “Seeks to consistently outperform the MSCI World Index while effectively managing risks across sectors and regions”. JGLO primarily invests in developed markets, although it may occasionally select companies in emerging markets. Moreover, “the Fund may, but does not currently expect to, hedge its currency exposure”. The portfolio turnover rate was 28% in the most recent fiscal year. This article will use as a benchmark the MSCI World Index, represented by iShares MSCI World ETF (URTH).

Portfolio

About 92% of asset value is invested in large and mega-cap companies. The portfolio is overweight in the U.S. (69.7% vs. 71.6% for the benchmark), followed by the U.K. (5.2%) and France (4.4%). The aggregate weight of Taiwan and Hong Kong is 4.4%, so direct exposure to geopolitical and regulatory risks related to China is low. The next chart lists the countries weighting more than 1%, excluding the U.S. for readability.

The heaviest sector is technology with 28% of assets. It is followed by financials and consumer discretionary, both close to 13%. Other sectors are below 10%. Compared to the benchmark, JGLO underweights mostly communication services.

The top 10 holdings, listed in the next table, represent 40.6% of asset value. The four heaviest names weigh over 5%. Risks related to other individual companies are low to moderate.

U.S. Ticker	Name	Weight%	EPS growth %TTM	P/E TTM	P/E fwd	Yield%
MSFT	Microsoft Corp.	7.46%	25.11	39.40	38.47	0.66
AAPL	Apple, Inc.	5.92%	9.26	35.39	34.47	0.44
AMZN	Amazon.com, Inc.	5.50%	763.59	54.78	42.52	0
NVDA	NVIDIA Corp.	5.38%	788.51	74.52	47.12	0.03
META	Meta Platforms, Inc.	3.52%	115.95	29.45	25.34	0.39
MA	Mastercard, Inc.	3.34%	25.70	34.69	30.54	0.60
OTCPK:NSRGY*	Nestlé S.A.	2.55%	31.09	22.26	18.98	3.13
OTCPK:SHECY*	Shin-Etsu Chemical Co., Ltd.	2.43%	100.04	23.51	N/A	1.53
OTCPK:LVMUY*	LVMH Moët Hennessy – Louis Vuitton SE	2.33%	11.34	23.55	22.89	1.81
OTCPK:MURGY*	Münchener Rückversicherungs-Gesellschaft AG	2.21%	N/A	N/A	10.13	3.19

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*The fund holds shares in the primary exchange.

Fundamentals

JGLO is slightly more expensive than URTH regarding valuation ratios, and it shows a higher earnings growth rate, as reported in the next table.

	JGLO	URTH
Price/Earnings	24.86	22.63
Price/Book	4.32	3.29
Price/Sales	3.46	2.41
Price/Cash Flow	16.89	15.09
Earnings Growth	26.45%	22.60%
Sales Growth	9.77%	9.07%
Cash Flow Growth	9.45%	10.11%

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Source: Fidelity website

Performance

Since inception 10 months ago, JGLO has met its objective of beating the MSCI World Index, with a 5% excess return. Nevertheless, price history is too short to evaluate the long-term potential of the strategy.

Competitors

The next table compares characteristics of JGLO and five of the most popular global equity ETFs:

• Goldman Sachs ActiveBeta World Low Vol Plus Equity (GLOV)
• First Trust Dow Jones Global Select Dividend Index Fund (FGD)
• Motley Fool Global Opportunities ETF (TMFG)
• Avantis All Equity Markets ETF (AVGE)
• Davis Select Worldwide ETF (DWLD)

	JGLO	GLOV	FGD	TMFG	AVGE	DWLD
Inception	9/13/2023	3/15/2022	11/21/2007	6/17/2014	9/27/2022	1/11/2017
Expense Ratio	0.47%	0.25%	0.56%	0.85%	0.23%	0.63%
AUM	$3.48B	$918.54M	$526.91M	$439.92M	$379.45M	$311.87M
Avg Daily Volume	$12.17M	$2.01M	$1.51M	$430.05K	$1.76M	$341.12K
Holdings	74	371	106	42	15	40
Top 10	40.60%	15.58%	17.75%	40.10%	95.52%	49.36%
Turnover	28.00%	31.00%	35.00%	4.00%	2.00%	15.00%

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They all include the U.S. in their portfolios. JGLO is the largest of these funds in assets under management, and the most liquid in dollar volume. Its expense ratio is average. The next chart plots total returns since 9/14/2023. JGLO is ahead of the pack, beating the second by 8.2% in 10 months.

Takeaway

JPMorgan Global Select Equity ETF is an actively managed ETF in global stocks focused on value, free cash flow and earnings growth. JGLO is overweight in U.S. large companies and information technology. Its 10-month history is too short to assess the strategy, but it is promising: it has met its objective of beating the MSCI World Index, and has also outperformed five of the most popular global equity ETFs.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.