JPMorgan Unconstrained Debt 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 57%. 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. 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, like 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 Nontraditional 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 an overweight government bonds in recent years. Different from its historical appetite, however, the strategy has also relatively underweighted government bonds compared with Morningstar Category peers in the most recent month. Additionally, there's been an underallocation from B rated bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to B rated bonds than peers. Finally, during the past few years, the fund leaned towards debt with five- to seven-year maturities. In recent months, however, the strategy had less exposure to debt with five- to seven-year maturities compared to its peers.
This strategy has a modest 3.5% 12-month yield, lower than its average peers' 4.9%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.4%. A lower yield tends to indicate lower credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower 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.