A unique approach to UK equities?

JPMorgan UK Equity Core Active UCITS ETF (JUKE) is the only European active ETF invested solely in UK equities. Now approaching its fourth anniversary, it has outperformed its benchmark since launch, including over the past year. According to the manager, this has been achieved through a benchmark-aware, bottom-up investment process that is driven by fundamental research and quantitative analysis, supported by risk controls, with the stated aim of providing modest long-term outperformance.

2026 could prove to be a good time to invest in, or increase exposure to, UK equities. The asset class has been out of favour for much of the last decade, particularly relative to the US and global markets. However, there are signs that sentiment may have started to shift, with 2025 delivering outperformance from UK shares. Over that period, JUKE has generated returns ahead of the benchmark.

Active exposure to UK equities

Launched in June 2022, JUKE provides low-cost, broad-based exposure to UK equities. Using a bottom-up, active approach, the managers adjust weightings based on fundamental research, seeking to outperform the benchmark, and, by extension, passive alternatives.

Source: Bloomberg, Marten & Co. Notes: 1) Vanguard FTSE All Share total return

JUKE – the only pureplay way to access UK equity exposure through an active ETF

JUKE is the only active ETF, invested solely in UK equities, currently available.

JUKE offers exposure to a portfolio of UK equities within the European active ETF market. While the active ETF market continues to expand, particularly in global equities and fixed income, JUKE is, at the time of writing, without a direct peer.

JUKE was created with the aim of addressing a gap in the market. Previously, investors seeking UK equity exposure faced a trade-off. They could either opt for passive ETFs, which offered low fees and transparency but no scope to outperform, or traditional active funds, which provided stock selection and the potential for excess returns, albeit with higher charges, daily dealing rather than intraday liquidity and less transparency. JUKE’s offering sits between these two approaches.

JUKE has received net inflows in each calendar year since inception in 2022, despite broader pressures across the UK equity sector.

Bottom-up stock selection combined with risk controls

Investors may wish to consult the fund’s website HERE

We met with Callum Abbot, one of JUKE’s three portfolio managers, who described the fund’s investment process. He says that the process is active and bottom-up, combining fundamental research with quantitative analysis. Callum stated that all investment decisions are ultimately made by a human.

JUKE is designed to serve as a “core” UK equity allocation, to either sit alongside higher risk funds (including those run by JPMorgan, such as JPMorgan UK Equity Plus Fund), or as an alternative to a passive fund. It is described as an “enhanced index” fund, that takes a low level of active risk.

JUKE is managed according to the team’s stated philosophy that a portfolio which is cheaper than the market, of higher quality and with stronger momentum, will outperform over time. The team makes use of the research resources available at JPMorgan Asset Management and conducts quantitative analysis, ranking all stocks in the investment universe based on value, quality and momentum characteristics. The team also regularly consults with JPMorgan’s internal analysts and speaks to external sell-side analysts.

The team says that it explicitly avoids taking significant market or macro positions. According to Callum, if UK interest rates appeared likely to fall, JUKE’s manager would not systematically overweight the housebuilding sector, but might instead choose to overweight selected individual housebuilding stocks.

JUKE seeks to outperform its benchmark by overweighting stocks that the managers believe have the greatest potential to outperform, and underweighting those with less such potential. The index contains around 550 stocks, compared with around 140 for JUKE. JUKE excludes many of the stocks at the smaller end of the index, as those outside the FTSE 100 make up less than 20 bps of the total individually, and in many cases much less. The team seeks to avoid a long tail and states that it will only hold smaller companies where it has particularly strong conviction.

The JUKE team uses a variety of methods to provide a risk overlay, aiming to avoid making large bets that it believes would not be appropriate for a core fund. All holdings are monitored for newsflow that may affect the team’s view of a stock. The portfolio is subject to a monthly rebalance, in which overweighted stocks that have performed well are trimmed, and the allocations to other favoured stocks are increased. The team also uses a proprietary risk tool, assessing factors such as value versus growth or exposure to “AI losers”, to seek to ensure that the portfolio is not taking unintended risks versus the benchmark. Callum reports portfolio turnover of around 2-3% per month. This appears to be generally consistent regardless of overall market volatility, with the JUKE team aiming to maintain a portfolio that is not vulnerable to major events, relative to the benchmark.

UK equities: an asset whose time has come?

The UK enjoyed an extremely strong 2025.

UK equities have recently experienced a resurgence, with indices reaching record highs and delivering increased total returns in 2025. After several years of underperforming global benchmarks that are dominated by US technology companies, the UK market produced one of its strongest annual performances for some time, outperforming its major peers.

The recovery appears to be associated with a combination of cyclical and structural factors. Higher dividend yields and a rotation into value and income-oriented stocks – characteristics that have been present in the UK market relative to the US – appear to have contributed. Performance may have also been influenced by investors broadening their focus beyond mega-cap technology, as well as strength in sectors such as financials, natural resources and insurance, which represent a larger proportion of the UK market.

Figure 1 presents this data graphically. From launch to the end of 2024, JUKE underperformed global equities, which appears to reflect the outperformance of the US market relative to the UK. However, 2025 saw a reversal, which has continued into the opening weeks of 2026, bringing cumulative relative returns since launch close to parity with the MSCI World Index.

Figure 1: JUKE’s NAV total return relative to MSCI World Index, rebased to 100, since launch to 28
February 2026

Despite this recent performance, the JUKE team describes the UK market as standing at a large discount to many other markets; for example, the US market continues to trade at around a 50% premium to the UK. Based on forecast earnings growth of more than 10% for the next few years, and a dividend yield of close to 4%, the team believes there is a strong case for a good total return even without any further re-rating. The UK market has significant exposure to sectors such as mining, energy and banks, which the JUKE manager believes offer investors diversification and are well placed for further upside given their current positions in their cycles.

Current overweight positions – examples

Serco

Serco is an outsourcing company providing services to government across defence, transport, justice, health and immigration. The position was originally initiated on valuation grounds. Since then, the company has secured some contract wins, which the manager says helped drive a re-rating. While the valuation is now less compelling, JUKE considers this to have been replaced by what it describes as a positive momentum story.

Coca-Cola HBC

Coca-Cola HBC (formally Coca-Cola Hellenic Bottling Company) is the third largest Coca-Cola anchor bottler (a large, strategically important bottling partner), which operates across multiple markets in Europe and further afield. The JUKE team says that it particularly likes the company’s exposure to higher growth developing markets, where rising incomes and increasing urbanisation are supporting strong demand for soft drinks.

Domestic banks

UK domestic banks experienced significant share price growth in 2025. Their valuations remain roughly in line with long-term averages despite what JUKE’s manager believes to be an above-average cycle. Interest rate exposure in the sector is hedged, so the benefits from the recent period of higher rates are seemingly spread over the longer term. JUKE’s manager thinks that the banks seem to have more regulatory and political support than in the recent past, and there may be potential for volume growth in the sector despite challenges in the UK economy.

Construction

JUKE’s manager comments that the construction industry has become more disciplined recently, limiting its exposure to fixed-price contracts following a series of costly setbacks in the past. End markets continue to see investment, for example in new schools and hospitals, which has led to stronger order books, it adds. Callum states that companies such as Morgan Sindall are benefitting from the push for office fitouts from companies encouraging employees to return to the workplace.

Current underweight positions – examples

REITS

The Real Estate Investment Trust (REIT) sector is sensitive to interest costs, so the current environment of higher rates after a prolonged period of near-zero rates may be unfavourable in the manager’s view. In addition, JUKE’s manager believes that the underlying assets of many REITs are of relatively poor quality, particularly in the retail and office subsectors.

Beverage companies

Companies such as Diageo have experienced a challenging period recently. The manager notes that this is partly cyclical, with consumers’ inventories of spirits taking some time to unwind following increased purchasing during Covid. In addition, Callum explains that the steep price increases during the pandemic now require incomes to catch up. There is also a longer-term structural question regarding whether people are drinking less alcohol, and whether this trend will persist. The JUKE team believes the evidence for this remains inconclusive, but states that the issue is affecting sentiment in the sector.

Structure

JPMorgan UK Equity Core Alpha is listed on a number of exchanges (see Figure 2), with both distribution and accumulation classes available. All share classes are denominated in sterling.

Figure 2: JPMorgan UK Equity Core Active UCITS ETF, available exchanges

Liquidity & spreads

Figure 3: Average daily liquidity and bid-ask spread of share classes, 12 months to 3 March 2026

As shown in Figure 3, trading is dominated by the two London share classes, which also have the lowest average bid-ask spread, at below 0.3%. There is trading in the other classes but it is limited, and often at a much wider spread.

For consistency, the fund is referred to throughout this note by the ticker, JUKE, on the basis that the default for many investors appears to be to hold the distribution class.

Tracking error

JUKE’s tracking error is low.

JUKE’s one-year tracking error to 28 February 2026 was 1.3%, measured as the standard deviation of the difference between its returns and those of the benchmark. This level is at the lower end of the expected range for an active ETF, even for those with a broadly quantitative approach and a holdings profile that remains close to the index. It suggests that return divergence has been limited, with some potential for modest outperformance.

Callum explains that the team operates with a “risk budget” for divergence from the index. Much of this is focused on stock selection, where the team believes it has an advantage. There is 30-50 bps of active positioning at a stock and sector level, with a typical active share of 18-20%.

The monthly rebalance is intended to return JUKE to the level of risk that the team aims for.

Fees

JUKE’s fees appear competitive.

JUKE’s total expense ratio (TER) is 0.25%, covering the management fee as well as custody, administration, audit and regulatory costs. The fee accrues daily and is reflected in the NAV. It excludes portfolio transaction costs and investor-level costs such as bid-ask spreads and brokerage commissions.

Callum describes JUKE as the lowest cost way of accessing JPMorgan’s active UK range of funds.

JUKE’s TER is higher than that charged for passive ETFs, which typically cost between 0.12% and 0.22%. However, the fund’s active approach is not present in passive products.

Top 10 holdings

JUKE’s top ten holdings are the same as the benchmark’s.

JUKE’s top 10 holdings are the same as those of the benchmark, although the weightings differ in each case. The largest overweights are to Shell and Rio Tinto, while the biggest underweight is to Unilever. The top 10 is slightly more concentrated than the index, a pattern that appears to be reflected across the portfolio as a whole: JUKE holds around 140 stocks versus around 550 for the benchmark, 240 of which are within the broader financials sector.

For the purpose of this report, the Vanguard FTSE All Share Index Unit Trust income units have been used, which seek to track the returns of the FTSE All-Share Index.

Figure 4: Top 10 holdings as at 31 January 2026

Asset allocation

While still broadly aligned with the benchmark, JUKE’s sector allocation appears to show greater divergence than is typical for an “index plus” active ETF. As Figure 5 illustrates, the fund is overweight in 10 of the 11 largest sectors, with only the gas, water & multi-utilities sector underweight. These are offset by a 3.6% underweight to the “others” category.

Figure 5: JUKE sector allocation as at 31 January 2026

Figure 6: JUKE sector allocation relative to comparator (%)

Performance

Relative performance has been strong, particularly recently.

Figure 7 shows that JUKE has delivered a small outperformance of the comparator. Returns tracked the index closely during the first 18 months after launch, but performance appears to have diverged from the start of 2024 and then over most of 2025. April 2025 saw an increase in relative performance, during the aftermath of President Trump’s “Liberation Day” tariff announcements, which coincided with significant market volatility.

Peer group

JUKE is the only European active ETF, currently available, that invests mostly or solely in UK equities. According to available information, there is no relevant peer group for comparison.

Figure 7: JUKE’s NAV total return relative to comparator, rebased to 100, since launch to 28
February 2026

Figure 8: Cumulative total return performance over periods ending 28 February 2026

Figure 8 shows that JUKE outperformed the index for all of the time periods provided, ranging from one month to three years.

Dividends

All income is returned to shareholders.

JUKE has both income and accumulation share classes. Its policy is to pass through cash dividends received from underlying holdings to shareholders, either through periodic distribution payouts or reinvestment, rather than retaining income within the fund. Dividends for the income class are typically paid quarterly.

The most recent dividend was 18.93p per share, paid on 6 February 2026, following distributions of 23.9p in November, 31.24p in August and 27.83p in May. Total distributions for the year were 101.9p, equivalent to a yield of 2.6% on the share price of £38.99 on 20 March. JUKE’s yield may, at times, be higher or lower than that of the index.

Management

JUKE is a sub fund of the JPMorgan ETFs (Ireland) ICAV, an umbrella structure with segregated liability between its sub-funds. It has three named managers: Callum Abbot (14 years at the firm), Christopher Llewelyn (41 years) and Richard Morillot (16 years). Callum and Richard focus on stock selection, while Chris focuses on implementation.

The portfolio management team is part of the international equity group, which comprises 76 investment professionals. Through the proprietary investment platform Spectrum, research is shared, which may facilitate collaboration across insights, analysis and company meetings.

The fund is managed by J. P. Morgan Asset Management, the asset management division of JPMorgan Chase & Co. The firm is among the largest investment managers globally, operating across developed and emerging markets with dedicated investment platforms in the UK, Europe, the US and Asia. The firm manages a broad pool of institutional, intermediary and retail assets, offering active, index and alternative strategies. Oversight, risk management and regulatory compliance are included within JPMorgan Chase’s group-wide governance and control framework.

Part of the deferred compensation of JUKE’s managers is allocated directly into the funds that they manage.

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