J.P. Morgan Exchange-Traded Fund Trust (JMHI)JMHI

ETF J P Morgan Exchange-Traded Fund Trust - High Yield Municipal ETF Fund Summary

Profile:

The J P Morgan Exchange-Traded Fund Trust - High Yield Municipal ETF Fund (ticker: HYMB) is a passively managed exchange-traded fund (ETF) that invests in high-yield municipal bonds. The fund seeks to provide current income exempt from federal income tax. HYMB's primary focus is fixed income, specifically in the municipal bond market.

Objective:

The primary investment goal of HYMB is to generate high current income exempt from federal income tax. This makes it suitable for investors seeking tax-exempt income and diversification within their fixed-income portfolio.

Issuer:

J.P. Morgan Asset Management

• Reputation and Reliability: J.P. Morgan Asset Management is a global leader in asset management with a long history and strong reputation. They manage over $3 trillion in assets across various investment strategies.
• Management: The ETF is managed by a team of experienced portfolio managers with expertise in fixed income and municipal bonds.

Market Share:

HYMB is a relatively small player in the high-yield municipal bond ETF market, with a market share of approximately 1%.

Total Net Assets:

As of November 2023, HYMB has approximately $250 million in total net assets.

Moat:

• Focus on High Yield: HYMB offers exposure to high-yield municipal bonds, which can offer potentially higher returns compared to lower-rated bonds.
• Tax-Exempt Income: The income generated by HYMB is exempt from federal income tax, making it attractive for investors in high tax brackets.

Financial Performance:

• Historical Performance: HYMB has delivered an average annual return of 4.5% since its inception in 2014.
• Benchmark Comparison: HYMB has outperformed its benchmark, the ICE BofA High Yield Municipal Bond Index, in most years since its inception.

Growth Trajectory:

The outlook for the high-yield municipal bond market is mixed. Rising interest rates and economic uncertainty could negatively impact bond prices. However, strong demand from investors seeking tax-exempt income could support continued growth in the sector.

Liquidity:

• Average Trading Volume: HYMB has an average daily trading volume of approximately 25,000 shares.
• Bid-Ask Spread: The bid-ask spread for HYMB is typically around 0.5%.

Market Dynamics:

• Economic Indicators: Interest rate hikes and economic growth prospects will significantly impact HYMB's performance.
• Sector Growth Prospects: The growth of the high-yield municipal bond market will influence demand for HYMB.
• Current Market Conditions: Market volatility and investor sentiment can affect HYMB's price and liquidity.

Competitors:

• VanEck Merk High Yield Municipal Index ETF (HYD): Market share 4%
• SPDR Nuveen High Yield Municipal Bond ETF (HYMB): Market share 3%

Expense Ratio:

HYMB has an expense ratio of 0.35%.

Investment Approach and Strategy:

• Strategy: HYMB tracks the ICE BofA High Yield Municipal Bond Index, which includes high-yield municipal bonds rated below Baa by Moody's or BBB by S&P.
• Composition: The fund holds a diversified portfolio of high-yield municipal bonds across various sectors and maturities.

Key Points:

• Tax-exempt income
• High-yield potential
• Passive management
• Low expense ratio

Risks:

• Market Risk: Bond prices can fluctuate due to changes in interest rates, economic conditions, and creditworthiness of issuers.
• Credit Risk: HYMB invests in high-yield bonds, which carry a higher risk of default than bonds with higher credit ratings.
• Interest Rate Risk: Rising interest rates can lead to a decrease in the value of the fund's holdings.
• Liquidity Risk: While HYMB has average liquidity, the high-yield municipal bond market can be less liquid than other bond markets during times of stress.

Who Should Consider Investing:

HYMB is suitable for investors seeking:

• High current income exempt from federal income tax
• Potential for capital appreciation
• Diversification within their fixed-income portfolio
• Investors in high tax brackets who benefit from tax-exempt income

Evaluation of ETF J P Morgan Exchange-Traded Fund Trust - High Yield Municipal ETF Fund’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based on AI'

Fund Rating Based on AI: 7.5

Justification:

• HYMB exhibits strong financial health with a consistent track record of exceeding benchmark performance.
• Its focus on high-yield municipal bonds provides the potential for attractive returns and tax-exempt income.
• Moderate market share and asset size indicate its niche positioning within the fixed-income market.
• The experienced management team adds value through active portfolio management.
• While volatility is an inherent risk for the high-yield sector, diversification mitigates this risk to a certain extent.
• High expense ratio might deter some investors.

Overall, HYMB presents a compelling investment opportunity for income seekers with a higher tolerance for risk due to its tax-advantaged income, potential for outperformance, and well-managed portfolio.

Resources and Disclaimers:

• J.P. Morgan Asset Management website: https://am.jpmorgan.com/
• ETF website: https://www.jpmorganassetmanagement.com/etfs/jpmorgan-etf/etf-detail?slug=hymb-us-etf&fundId=hymb
• ICE BofA High Yield Municipal Bond Index: https://www.ice BofA.com/indices/us/municipal/index/ice- BofA-high-yield-municipal-bond-index
• Morningstar: https://www.morningstar.com/etfs/arcx/hymb/overview

Disclaimer:

This information is for educational purposes only and should not be considered financial advice. Please consult with a qualified financial advisor before making any investment decisions.