JP Morgan Asset Management’s actively managed U.S. equity ETF is now the largest of its kind in Europe—and the most widely held active fund in fund-of-funds portfolios. How did it get there? Not by bold bets, says portfolio manager Piera Elisa Grassi, but precisely by avoiding them.
With 145 funds investing in it and an average portfolio weight of 6.38 percent, the JPM US Research Enhanced Index Equity Active ETF has become a staple in European investor portfolios. That figure—from Morningstar’s latest Landscape Report—even surprised seasoned ETF watchers. “I was stunned when I saw it,” said Monika Calay, director of research at the fund ratings firm. “Active ETFs remain a small segment in Europe. So to see this one on top was really unexpected.”
Top 10 active Ucits ETF issuers, by AUM
Active ETFs are still a niche in Europe, with total assets still dwarfed by their passive peers. According to Morningstar and industry association Efama, assets in actively managed ETFs in Europe reached about 55 billion dollar at the end of last year—around 2.5 percent of the region’s total ETF assets. The fact that JP Morgan’s ETF is also the second most widely held equity fund across all ETFs in fund-of-funds portfolios—after only the iShares Core S&P500 ETF—shows it’s gaining serious traction.
London-based portfolio manager Grassi attributes the ETF’s success to a mix of disciplined risk management and deep analyst insights. She runs the strategy out of London together with lead portfolio manager Raffaele Zingone, who is based in New York. “We aim to do better—modestly, consistently, and at scale,” she told Investment Officer, describing the team’s approach.
Annual performance of the JPMorgan US Research Enhanced ETF
A strategy decades in the making
The “research enhanced” model is built on JP Morgan’s global fundamental research platform, which includes about 80 equity analysts across the U.S., Europe, and Asia. Each analyst covers a small universe and assigns conviction scores using a shared valuation framework. “It creates a common language,” said Grassi. “It allows us to scale local insights into portfolio decisions.”
The fund targets sector and style neutrality relative to its benchmark, but takes deliberate over- and underweights based on bottom-up insights. “For instance, we might have the same sector weight in banks as the S&P500,” Grassi explained, “but we’ll overweight the banks our analysts favor and underweight the rest.”
An analysis of the fund’s holdings shows only subtle differences compared to typical ETFs. Still, the ETF holds between 200 and 375 stocks—just half of the S&P500’s total—which may contribute to performance.
Weightings of top 20 holdings in JPM US (acc) vs. S&P 500 Total Return
Grassi says she spends a significant amount of time challenging assumptions and discussing stock ideas with analysts. Thanks to JP Morgan’s internal tech platform, she only needs minutes each morning to manage spreadsheets. “We never ignore analysts’ input without a very strong reason,” she noted. “Our job is to translate their views into a diversified portfolio—not to second-guess their research.”
Low active share, high information ratio
The idea that an active ETF may look like an index tracker on the surface but differ only subtly underneath has come under criticism. In a recent Financial Times column, former HSBC portfolio manager Stuart Kirk described active ETFs as “passive in disguise,” arguing that their portfolios often look indistinguishable from those of index-tracking funds. The industry has coined a term for this: the “shy ETF,” a kind of closet indexer in ETF form.
Grassi disagrees with Kirk’s criticism, but doesn’t deny the low active share. “Our active share is about 30 percent,” she said. “That’s low compared to traditional active managers—but that’s by design. We aim to deliver a steady pattern of modest outperformance without taking excessive risk.”
She added that the low active tilt allows for a strategy with limited tracking error and a higher information ratio. “We don’t claim to be a high-octane alpha engine. We’re a scalable, cost-efficient alternative to passive investing—designed for investors who want their equity allocation to work just a bit harder.”
Jill Rootsaert, head of ETF distribution for the Benelux, added that critics often overlook the structural shortcomings of passive products. “Even the best-run passive ETF has a negative tracking difference versus its benchmark, and many ESG passive ETFs end up with tracking errors of 1 to 4 percent compared to the standard index,” she said. “That matters in practice. This strategy has repeatedly proven it can deliver extra return while staying close to the benchmark.”
Grassi sums up the debate as “a matter of expectations.” “We’re not positioning this ETF as a concentrated alpha strategy. We offer an alternative to traditional passive products that still delivers outperformance.”
The numbers support that claim. Over the past five years, the ETF delivered an average annual net return of 16.68 percent (as of June 30, 2025), beating the Standard & Poor’s (S&P)500 Index (Total Return Net) by 49 basis points (geometrically), after fees of 20 basis points.
Who’s buying?
JP Morgan’s dominance in the European active ETF segment is partly thanks to its early mover advantage. While dozens of competitors have entered the market in recent years, many of their ETFs are still less than two years old.
That’s a key factor for buyers—especially in Europe. “In the beginning, our investors were mainly large institutional clients already familiar with our segregated mandates,” Grassi explained. “But the ETF wrapper has opened the door to an entirely new audience: wealth managers, model portfolio builders, and even retail investors.”