JPMorgan Corporate Bond Fund earns an Above Average Process Pillar rating.
The main driver of 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 outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Strong risk-adjusted performance also bolsters the rating. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.
Compared with other funds in the Corporate Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity 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. Compared with the average strategy in the category, the managers have been underweight BB rated bonds in recent years. In the latest month, the strategy has also relatively underweighted BB rated bonds compared with Morningstar Category peers. Additionally, the fund has exhibited a sector bias away from government bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to government bonds than peers. Finally, during the past few years, the fund leaned towards debt with three- to five-year maturities. In this month, the strategy also leaned more towards debt with three- to five-year maturities compared with its peers.
This strategy has a 4.6% 12-month yield, higher than its average peer's 4.2%. In addition, it has a 5.1% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). While a higher yield may deliver more income, it also tends 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 holds assets with a higher average surveyed credit quality of BBB, compared with the category average of BB, and 5% of the strategy's assets are rated non-investment-grade compared with its average peers' 33%. Strategies that take on less credit risk can often shoulder more-adverse market conditions.