The U.S. economy has posted positive quarterly growth for the first time this year. The economy grew at a 2.6% annualized rate in the third quarter. However, the Fed is widely believed to deliver a fourth consecutive 75-basis-point interest rate hike at its next meeting.

The aggressive rate hikes to tame high inflation has caused widespread recessionary fears. On top of it, the upcoming midterm elections will likely induce more volatility in the stock market.

Amid this backdrop, investors looking for a safe way to earn a larger yield than other assets, such as money market funds or long-term treasuries, could consider investing in JPMorgan Ultra-Short Income ETF (JPST). It is an actively managed fund that facilitates cash management at a low cost. The fund invests in short-term investment-grade, U.S. dollar-denominated short-term fixed, variable, and floating rate debt.

The ETF has had marginal changes in its price this year and over the past six months. It closed its last trading session at $50.08. The fund has an average volume of 4.89 million.

Here are the factors that could influence JPST’s performance in the near term:

Fund Stats

JPST currently has a $50.10 NAV and $22.59 billion in fund assets. Its expense ratio of 0.18% is considerably lower than the category average of 0.64%. Over the past year, the fund’s net inflows were $4.35 billion. Its net inflows were $3.68 billion over the past six months and $698.71 million over the past month.

The fund’s last monthly dividend of $0.09 was payable on October 6, 2022. Its annual dividend of $0.41 yields 0.80% on the current price.

Fund Holdings

As of September 30, JPST’s portfolio breakdown stood as follows: 39.9% in corporates (investment grade), 18.2% in cash or cash equivalents, 15.8% in CD, 15.3% in CP, 8.5% in asset-backed securities, 1.8% in Mortgage (non-call), 0.2% in non-corporate credit, and 0.5% in other.

The fund’s top holdings include BNP PARIBAS 3.5% 03/23 with 0.94% of net assets, SVENSKA FLT 12/22 with 0.90% of net assets, and NORINCHUKIN BK 3.95% 08/2 with 0.87% of net assets.

POWR Ratings Reflect Promising Prospects

JPST’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

The ETF has a Trade, Buy & Hold, and Peer grade of A. In the 32-ETF Ultra-Short Term Bonds group, it is ranked #2. The group is rated A.

Click here to see all POWR Ratings for JPST.

View all the top ETFs in the Ultra-Short Term Bonds group here.

Bottom Line

The current volatile market backdrop makes short-term investment options popular. JPST has shown little volatility this year and has thus become popular on Wall Street. Moreover, it is a low-cost investment option to generate stable returns. Given its strong fund stats and an attractive regular dividend, JPST might be a solid investment now.

How Does JPMorgan Ultra-Short Income ETF (JPST) Stack Up Against Its Peers?

While JPST has an overall POWR Rating of A, one might consider looking at its industry peers, SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) and iShares Floating Rate Bond ETF (FLOT), which also have an overall A (Strong Buy) rating.

JPST shares were trading at $50.10 per share on Monday morning, up $0.02 (+0.04%). Year-to-date, JPST has gained 0.11%, versus a -17.80% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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