Investing in Value, with JAVA

Looking at investment experience

In assessing any investment, topline return performance is the first order thought that naturally comes to mind for many investors. However, in a market environment that has seen interest rates rapidly increase, mitigating losses is also crucial. Most of the hardest hit stocks in 2022 were those with premium price-to-earnings (P/E) multiples considered “pricey” from a valuation perspective, they ultimately suffered the largest price declines. Over the past three years, US Large Cap Value equities, as represented by the Russell 1000 Value TR Index, have exhibited fewer losses than the broader market, while also garnering somewhat similar gains over the period in question. 

In the current higher for longer interest rate environment, current earnings tend to become more valuable and future earnings less valuable, which favors value stocks. While the year-to-date performance of value stocks has been muted, 1-Year and 3-Year performance have been compelling. 

While the current economic environment still has a high degree of uncertainty present, value investing can still be of benefit to investors. In the context of large-cap equities, value investors that are able to identify and invest in well-established companies with substantial market capitalizations trading at prices below their perceived intrinsic value will benefit from their resurgence, once the market recognizes the underlying financial strength, business prospects, or future growth potential of these firms.  

A value-style focused investment solution

The JP Morgan Active Value ETF (Ticker: JAVA) is a pure value equity portfolio that utilizes a fundamental, bottom-up approach to identify attractively valued companies within each sector. As noted in the fund’s prospectus, securities held by the fund will predominantly be of companies with market capitalizations similar to those within the universe of the Russell 1000 Value Index.

The underlying strategy for the ETF utilizes the firm’s U.S. Value strategy and its Large Cap Value strategy, combining them to construct the portfolio. In executing the ETF’s investment objective, the manager will integrate financially material Environmental, Social and Governance (ESG) factors in both the investment analysis and decision-making processes, with the goal of enhancing long-term, risk-adjusted financial returns.

For investors seeking a value-style focused investment solution, JAVA offers a single-ticket solution to a mandate solely focused on companies that are stable and have showcased their resiliency over varying market cycles.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.