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JPMorgan International Focus R2 IUERX

Medalist Rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 25.34  /  +0.40 %
  • Total Assets 1.6 Bil
  • Adj. Expense Ratio
    1.300%
  • Expense Ratio 1.300%
  • Distribution Fee Level Average
  • Share Class Type Retirement, Medium
  • Category Foreign Large Blend
  • Investment Style Large Blend
  • Min. Initial Investment
  • Status Open
  • TTM Yield 1.55%
  • Turnover 36%

USD | NAV as of Mar 27, 2024 | 1-Day Return as of Mar 27, 2024, 10:15 PM GMT+0

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Morningstar’s Analysis IUERX

Medalist rating as of .

A standout option.

Our research team assigns Silver ratings to strategies that they have a high conviction will outperform the relevant index, or most peers, over a market cycle on a risk-adjusted basis.

A standout option.

Associate Director Andrew Daniels

Andrew Daniels

Associate Director

Summary

JPMorgan International Focus is a standout non-US equity strategy because of its strong management team and robust investment approach.

This strategy is in the capable hands of Tom Murray and Shane Duffy. They boast a respective 27 and 24 years of experience—all with J.P. Morgan—and have co-led this offering since its 2011 inception. They work collaboratively and have complementary skill sets, with Murray having more of an energy and materials background, while Duffy previously covered consumer stocks. The managers also work together on the more diversified sibling offering JPMorgan International Equity, alongside teammates James Sutton and Zenah Shuhaiber, who have also been with the firm their entire careers.

The managers make full use of J.P. Morgan's huge analytical resources to build this best-ideas—but still well-balanced—portfolio. Supporting the managers are eight global sector specialists who scour the best ideas from the firm's regional research teams that cover about 2,500 stocks globally. The global specialists ultimately rank prospective stocks from A to C, with A representing their highest-conviction bets, a framework that helps form position-sizing decisions in the end 40- to 50-stock portfolio. The managers have wide flexibility at the sector and country levels, but they are cognizant of minimizing unintended sector, country, and style-related bets relative to the MSCI ACWI ex USA Index. For example, while they are willing to pay up for some growth-oriented opportunities, valuation is an important consideration as well, hence why the end portfolios tend to land in the core portion of the Morningstar Style Box. Overall, management has married the firm's in-house strengths with process traits to maximize the odds of success here, helping drive the Process rating to High from Above Average.

Murray and Duffy have produced compelling returns during their tenure here. Since the strategy’s November 2011 inception, through February 2024, the institutional share class gained 7.1% annualized, beating the index's 5.7% return and 82% of its foreign large-blend Morningstar Category peers. Returns here were also better than JPMorgan International Equity, whose institutional shares returned 6.3% during the same period.

Rated on Published on

Increased conviction in this strategy's well-codified and robust approach drives its Process rating to High from Above Average.

Associate Director Andrew Daniels

Andrew Daniels

Associate Director

Process

High

The offering focuses on non-US firms that score well on balance-sheet strength, profitability, and management quality. Idea generation relies on this team's global sector specialists, who scour the best ideas from J.P. Morgan's vast regional equity research teams, which cover approximately 2,500 stocks around the world, by viewing their research with a global lens. The global specialists ultimately rank stocks from A to C, with A representing their highest-conviction bets, a framework that helps form position-sizing decisions. The team is long-term-oriented—it sets five-year expected return targets—so it's no surprise that annual portfolio turnover trends around 30%. While management is willing to pay up for some growth-oriented opportunities, valuation is an important consideration as well. As a result, the portfolio is well-balanced from a style perspective, hence why it has historically landed in the core portion of the style box.

This best-ideas portfolio is fairly concentrated, comprising 40 to 50 stocks, although individual holdings are still typically capped at 5%. Management wants stock selection to drive returns, and while sector and country bets can deviate up to 20 percentage points relative to the MSCI ACWI ex USA Index, full use of that flexibility has been rare in practice.

JPMorgan International Focus shares many traits with its more diversified sibling JPMorgan International Equity, but there are some differences. International Focus is benchmarked to the broader MSCI ACWI ex USA category index (which includes emerging markets), but International Equity is benchmarked to the MSCI EAFE Index, which excludes emerging markets. As of December 2023, International Focus' 12% emerging-markets exposure was well above International Equity's 1% but still represented a sizable underweight compared with the category index's 19%. The MSCI EAFE Index also excludes Canada, so International Equity won’t own Canadian stocks, but they can be owned in International Focus. As of December 2023, International Focus had 4% allocated to Canada, less than the category index's 8%.

Portfolio exposures reinforce that management is cognizant of balancing quality and valuation. Indeed, quality metrics like returns on invested capital have trended above the category index. At the same time, price multiples like price/earnings have typically been slightly higher than the category index over the years but well below the growth version of the index.

Japan has become a growing area of interest for the team, partially owing to improving corporate governance. The team added a handful of Japanese holdings since mid-2022 (through December 2023), including banking firm Mitsubishi UFJ Financial Group. That helps explain the portfolio’s Japan stake rising to 13% from 6% during the same period, now closely in line with the category index's 14%.

Rated on Published on

This strategy’s experienced leadership and strong supporting cast merit an Above Average People rating.

Associate Director Andrew Daniels

Andrew Daniels

Associate Director

People

Above Average

Tom Murray and Shane Duffy have co-led this offering since its November 2011 inception. Murray and Duffy have been with J.P. Morgan for their entire careers, possessing 27 and 24 years of investment experience, respectively. They work collaboratively and have complementary skill sets, which is a plus for this best-ideas portfolio. Indeed, Murray has more of an energy and materials background, while Duffy previously covered consumer stocks. The managers also work together on the more diversified sibling offering JPMorgan International Equity, alongside teammates James Sutton and Zenah Shuhaiber, who have also been with the firm their entire careers.

The managers, who are based in London, are supported by eight global sector specialists, averaging 22 years of experience and 12 at J.P. Morgan. The specialists scour the best ideas from the firm's huge equity research resources—by viewing their regional research with a global lens—providing ample comfort around coverage breadth. While the group has been stable over the years, it did see some changes in 2023. Lucy Parken and Sara Bellenda joined the specialist team in March 2023, though both had already been with the firm for many years. Parken took over industrials coverage for the departed Niranjan Aiyagari in addition to team management responsibilities. Bellenda's focus is on real estate, utilities, and infrastructure.

Rated on Published on

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.

Associate Director Emory Zink

Emory Zink

Associate Director

Parent

Above Average

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.

Rated on Published on

Tom Murray and Shane Duffy have co-led this offering since its November 2011 inception.

Associate Director Andrew Daniels

Andrew Daniels

Associate Director

Performance

Since then, through February 2024, the institutional share class gained 7.1%, beating the MSCI ACWI ex USA Index's 5.7% return and 82% of its foreign large-blend category peers. While volatility(as measured by standard deviation of returns) was slightly higher than the index's, risk-adjusted returns told a similar story, with its Sharpe ratio of 0.45 beating the index's 0.37 and 82% of its peers. Returns here were also better than its more diversified sibling offering JPMorgan International Equity, whose institutional shares returned 6.3% during the same period.

While the offering is well balanced from a style perspective, it has had a slight growth signature. That helps explain why the strategy's best years have tended to be when growth leads the way, such as in 2019 and 2020. Conversely, the offering struggled in 2022, when value held up much better than growth. The strategy fell 18.5% for the year, which was worse than the index's 16.0% loss and 80% of peers. Poor stock selection in industrials was the primary culprit, including distributor Ferguson. But management stuck to its knitting, and the strategy bounced back nicely in 2023, a year when value again beat growth (outside the US). The offering gained 17.0% in 2023, outpacing the index's 15.6% gain, in part thanks to healthcare firm Novo Nordisk and 2022 laggard Ferguson.

Published on

It’s critical to evaluate expenses, as they come directly out of returns.

Associate Director Andrew Daniels

Andrew Daniels

Associate Director

Price

Based on our assessment of the fund’s People, Process, and Parent Pillars in the context of these expenses, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Medalist Rating of Silver.

Published on

Portfolio Holdings IUERX

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 32.9
Top 10 Holdings
% Portfolio Weight
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