JPMorgan Limited Duration Bond benefits from the collaborative efforts of an experienced group of securitized specialists and a solid approach. Those advantages are enough to award the strategy’s cheapest share class a Morningstar Analyst Rating of Silver, while its more expensive share classes are rated Bronze or Neutral.
Veteran managers Michael Sais and Robert Manning, who have managed the strategy since 1995 and 2013, respectively, have the support of a cadre of value-driven managers, analysts, and traders with dedicated securitized and credit specialties based in Columbus, Ohio. JPMorgan’s efforts to more closely integrate its fixed-income resources across various global sector hubs has improved this group’s access to the broad firm’s research and risk tools.
The team applies rigorous fundamental analysis to assets across the securitized spectrum, and its profile is fairly unique in its peer group. The strategy’s Bloomberg 1-3 Year Government Credit Index benchmark holds no securitized sectors, while its typical short-term bond Morningstar Category peer dedicates around a fourth of its portfolio to securitized investments. This portfolio has held 70%-90% in such assets during the preceding decade, primarily comprising agency collateralized mortgage obligations along with nonagency mortgages, agency passthroughs, commercial mortgages, and asset-backed securities. The team limits credit risk by limiting purchases to investment-grade fare and minds interest-rate risk by keeping duration in a one- to three-year band.
Though Sais and his team have a storied history picking CMOs with strong cash flows, the strategy’s results have been mixed relative to its benchmark and peers over his long reign as lead manager: from September 1995 through August 2021, its Institutional share class’ 3.5% result roughly matched its bogy but lagged 70% of its distinct category rivals. The strategy’s persistent underweighting in corporate credit relative to its typical peer and benchmark will cause it to trail when corporate credit rallies but outperform in more-challenging environments. When spiking Treasury yields jittered the market over the first quarter of 2021, the strategy held up a bit better than its typical rival.