On this episode of the “ETF of the Week” podcast, VettaFi’s Head of Research, Todd Rosenbluth, discusses the JPMorgan U.S. Tech Leaders ETF (JTEK) with Chuck Jaffe of Money Life. The pair discusses several topics related to the fund to give investors a deeper understanding of the ETF.

Chuck Jaffe: One fund, on point for today, and the expert to talk about it. Welcome to the ETF of the Week!

Yes, this is the ETF of the Week, where we examine trending, new, newsworthy, and unique and intriguing exchange-traded funds with Todd Rosenbluth. He’s the head of research at VettaFi, and if you go to VettaFi.com, you’ll find all the tools and research you need to be a savvy, smart investor in ETFs. Todd Rosenbluth, it’s great to chat with you again!

Todd Rosenbluth: It’s great to be back!

Chuck Jaffe: Your ETF of the Week is…

Todd Rosenbluth: The JPMorgan U.S. Tech Leaders ETF, JTEK. J-T-E-K

Chuck Jaffe: J-T-E-K, the JPMorgan U.S. Tech Leaders ETF. Well, tech has been leading a lot of things in this market for a long time. But, why this fund now?

Todd Rosenbluth: So, there’s a few things that caught my eye. This is an actively managed ETF from JPMorgan, which has become one of the leaders in actively managed ETFs. JTEK has gathered over $1 billion of new money this year. It actually hasn’t even turned two years old and it’s over $2 billion in assets.

It’s outperforming what I would consider to be the leading place to get exposure to technology in a diversified manner, that’s the [QQQ]. JTEK is outperforming this year. I’m sure we’ll dive into this, but “tech leaders” does not necessarily mean companies that are in the technology sector. Management has discretion and uses it to invest in companies that are using technology, not necessarily in the technology sector.

Chuck Jaffe: Well, let’s talk about that a little bit, because what I glean from a quick look at the portfolio is that this is kind of a way for people who think of technology these days as everything AI. And there’s a legitimate discussion of whether you want, you know, AI or “AI-adjacent.” This is kind of that “AI-adjacent,” “technology-adjacent,” at least a little bit, right?

Todd Rosenbluth: Right. So, many of the companies that are in this portfolio, you could probably connect the dots. Some extremely directly. So, Nvidia is the largest holding; Snowflake is the second-largest holding. I think you could connect Snowflake in to that space.

But Robinhood, for example, is the third-largest holding. Robinhood is actually a financial company, according to the GICS sector classification. But, obviously, people who are using Robinhood know that you’re doing so on a website with cool bells and whistles from a technology standpoint.

So, I think Robinhood is a great example of a company that is tapping into technology to support its growth. And so I would think of this as more of a growth ETF, the way I think of the QQQ’s, the Invesco QQQ Trust, as opposed to a pure technology sector ETF.

Chuck Jaffe: Yeah, the one that stood out to me, beyond Robinhood, in the top ten holdings, when I looked, was ServiceNow. Which yes, it’s a tech company, but it’s really about servicing and providing solutions to other tech companies, so it’s kind of “tech-adjacent”.

Todd Rosenbluth: Right!

Chuck Jaffe: That being the case, as you point out, still, Nvidia is still the biggest player at this point, when you evaluate an ETF and it’s in the tech space. On the one hand, while you build a portfolio, you don’t want tons of overlap.

On the other hand, any fund that doesn’t have Nvidia in it or one or two of the Mag Seven stocks is likely to not get past any investor’s radar because it’s just not going to have the performance. So, do you discount the fact that, like, almost any fund we talk about, that if the word “tech” is in there, it’s going to have Nvidia?

Todd Rosenbluth: I think if you’re going to have a technology-related strategy or even a growth strategy, then you’re likely to find Nvidia within the portfolio. You know what’s not in this portfolio, at least in the top ten holdings, as I’m looking at it off-screen, is Apple or Microsoft.

So, this is active management deciding which companies within the technology or “tech-adjacent” space are appropriate. And Nvidia is roughly 5% of the portfolio. The Nvidia weighting is larger than you’d find within some traditional index-based growth or technology sector ETFs.

So, I think before you get there, you have to understand what you own and decide if this can complement your overall portfolio. Depending upon what people own, I think this can complement and offer growth exposure, but in an active management manner.

Chuck Jaffe: I will point out that the fund does have Microsoft; it’s not in its top ten, but it’s in the top 20 holdings. But again, as you look through a portfolio, and we never second-guess, we don’t go in and say, “Hey, what are they doing?” This is an actively managed fund, so you know it’s going to have other things.

But again, to prove that point that you’re looking at — the way it plays the big names — is that this is a company that has a higher percentage of its assets in Shopify than it does in Amazon. And that was the other thing that I took out of it. There’s your side, where again, it’s hard to be a “tech leaders” fund, say you’re investing in leading technology companies and not have Amazon. But that active management side says, “Yeah, but Shopify is a bigger piece.”

Todd Rosenbluth: Right. We’re seeing more and more advisors and investors are turning to actively managed ETFs to benefit from that expertise, that discretion that sorts through the universe, and looks for companies from not only a fundamental basis, but a valuation basis. And you get the benefits of that experience, or hopefully you get the benefits, in the returns. And thus far this year, JTEK has done its job of outperforming, at least what I was considering the proxy of the Q’s.

Chuck Jaffe: Where does this fit in with a portfolio? Because we know investors—if you don’t have technology in your portfolio, you either don’t have a portfolio or you’re dead. There’s just no way that people don’t have exposure. We’ve already talked a little bit about Nvidia overlap, but where does this fit in? Who is this fund right for, and what are we trying to achieve with it if we’re adding it to a portfolio that we know does have some of these big-name stocks already?

Todd Rosenbluth: So, to me, this is a growth strategy. This is a large-cap, but I guess the flexibility to own beyond large-cap. This, to me, this would be a large-cap growth strategy. So, if you own more core strategies that were tied to it. I guess if you’re tied to the S&P 500 and you want the benefits of active management to complement that, and you’re willing to pay a little bit of a premium — this fund has, I believe, a fee of 65 basis points — and you want to get the benefits of active management, this can be part of your growth slice of a portfolio.

This can be a growth alternative if you’ve invested in the Q’s. I feel like I’ve referenced the Q’s a couple of times today. But for people who are appreciably comfortable and interested in active management, this could be one or two of your large-cap strategies, but with a tilt toward growth.

Chuck Jaffe: It’s J-T-E-K, the JPMorgan U.S. Tech Leaders ETF, and it’s the ETF of the Week from Todd Rosenbluth and VettaFi. Todd, great stuff as always. See you again next week.

Todd Rosenbluth: I’ll see you next week, Chuck.

Chuck Jaffe: The ETF of the Week is a joint production of VettaFi and Money Life with Chuck Jaffe, and I’m Chuck Jaffe. I’d love it if you learned all about my hour-long weekday podcast. You can find it at MoneyLifeShow.com or wherever you find your favorite podcasts.

If you’re searching for more information on your favorite ETFs, or maybe the thing that’ll become your next favorite ETF, like today’s pick, go to VettaFi.com, where they’ve got a full suite of tools that’s going to help you be a more confident, smarter investor. They’re on X at @Vetta_Fi. Todd Rosenbluth, their head of research, is my guest; he’s on X as well. He is at @ToddRosenbluth.

The ETF of the Week is here for you every Thursday. Make sure you don’t miss an episode by following along on your favorite podcast app, and we’ll be back next week with another ETF for you to consider.

Until then, happy investing, everybody!

Note: This article was created in part through assistance from AI tools. The content has been thoroughly reviewed and edited by the author.

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