JPMorgan High Yield Municipal ETF JMHI

The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.

The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in A rated bonds and an overweight in cash compared with category peers. The strategy's entire management team changed less than a year ago. The strategy's new leadership earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Jpmorgan High Yield Municipal ETF earns an Above Average Process Pillar rating.

The leading factor in the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. The parent firm's five-year risk-adjusted success ratio of 57% also influences the rating. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by the experience of the management team, which averages five years at this fund.

Compared with other funds in the High Yield Muni Morningstar Category, this fund consistently holds a significantly larger cash position over the past few years. But in terms of long-term interest-rate sensitivity, it does not have a portfolio bias and hews closely to peers.

This strategy has a 4.3% 12-month yield, higher than its average peer's 4.1%. Plus, its 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return) sits at 4.6%. Higher yields tend to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB.

This strategy has seen its entire listed management team change within the past three years. Even though this strategy dates back to September 2007, it's difficult to analyze the new team until they spend more time on the strategy.

Note: The People Pillar rating is indirectly assigned by an analyst. At least one of the managers on this fund manages a different product rated by an analyst. The analyst-assigned People Pillar rating(s) for these managers are combined with algorithmic scores for any non-covered managers on a tenure-weighted basis.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse asset classes, the firm has more tightly integrated its capabilities in recent years, notably through the development of proprietary analytical and risk systems. Investment teams are robustly staffed and helmed by seasoned contributors. The firm’s strategies tend to produce reliable portfolios, and several flagship offerings are Morningstar Medalists. Manager incentives align with fundholders'; compensation reflects longer-term performance factors, and portfolio managers invest in the firm’s strategies as part of their compensation plans.

The firm’s funds tend to be well-priced, but they aren’t as competitive as many highly regarded peers of similar scale. Recent product launches include thematic and single-country strategies, both of which carry the potential for volatile performance and flows, along with misuse by investors. The firm remains intrepid when it comes to developing an environmental, social, and governance-focused framework and continues to move into other areas such as direct indexing through its 55iP acquisition and China through its joint venture, but these complicated initiatives take time to assess any real and lasting effect.

Since the new regime's current strategy is not necessarily representative of the past, it is difficult to compare them. The new team took the reins in February 2024 and looking at their performance so far, they have posted similar results to both the category index and category average. Since the manager change two months ago, the fund lost 0.5% mirroring both its average category peer and the category benchmark, Bloomberg Barclays 65% High Grade/ 35% High Yield Bond Index. With this narrow of a time frame with the new team, it is difficult to meaningfully assess the fund’s risk.

Thus, assessing cost is a critical step in any investment evaluation. This share class is in the cheapest quintile of its Morningstar Category. Its attractive expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class should be able to deliver positive alpha compared with its category benchmark, leading to its Morningstar Medalist Rating of Bronze.