JPMorgan Ultra-Short Municipal A USMSX

The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

The strategy receives an Average Process Pillar rating, after recently downgrading from Above Average. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in cash and an underweight in debt with three- to five-year maturities compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

JPMorgan Ultra-Short Municipal Fund earns an Average Process Pillar rating.

The most meaningful contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 56%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also supports the rating. Lastly, the process is limited by the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

Compared with other funds in the Muni National Short Morningstar Category, this fund takes on higher credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been significantly overweight cash in recent years. In the latest month, the strategy has relatively overweighted cash compared with its peers as well. Additionally, there's been a bias away from debt with three- to five-year maturities over the past few years. Similarly, in recent months, the strategy also had less exposure to debt with three- to five-year maturities than peers. Finally, during the past few years, the fund leaned away from AAA rated bonds. In recent months, the strategy also had less exposure to AAA rated bonds compared to its peers.

This strategy's 12-month yield is 2.7%, which is neck-and-neck with its average peer. It also has a 3.0% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). The portfolio has a lower average surveyed credit quality of BBB, compared with the category average's A and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies that take on more credit risk tend to be at their best when markets are as well. This risk contributes to strong performance during bull markets at the cost of losing more on the downside.

Even though this strategy’s track record dates back to May 2016, the listed management team joined within the past three years. Therefore, the track record achieved under the previous team is not representative of the fund’s current merits.

Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other 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.

The fund’s long-term track record is largely no longer applicable, as it is not necessarily representative of the current strategy. The new team took the reins in February 2024 and looking at their performance so far, they have posted admirable results. Since the manager change one month ago, the fund returned 0.1% through month-end, matching its average peer's 0.1% and outperforming the Bloomberg Barclays Municipal 3 Year 2-4 Year Maturity Bond Index’s 0.2% loss. With this narrow of a time frame with the new team, it is difficult to make a meaningful assessment of the fund’s risk.

It is good practice to weigh them heavily in any investment evaluation. This share class lands in the middle quintile of its Morningstar Category. Its middling fee, paired with the fund’s People, Process, and Parent Pillars, suggests that this share class could struggle to produce positive alpha versus its category benchmark, leading to its Morningstar Medalist Rating of Neutral.