JPMorgan International Focus Fund Class R2 IUERX

JPMorgan International Focus exhibits many of the key qualities needed to deliver strong long-term results, underpinned by a robust and repeatable process and an experienced, well-resourced team. Accordingly, we maintain the strategy’s Above Average People rating and High Process rating.

There have been some changes within the management team since our last review. As of September 2025, Tom Murray has assumed sole lead manager responsibilities for the core-oriented strategies: International Equity, International ADR, and International Focus. At the same time, he stepped down from managing International Growth. Meanwhile, Shane Duffy has remained lead manager for International Growth but has relinquished his roles on International Equity, International ADR, and International Focus. These shifts are part of a broader initiative to more clearly align portfolio management responsibilities with distinct style cohorts, allowing managers to focus more deeply on their areas of expertise.

Murray is now supported by comanager Lucy Parken, who was named to the role in September 2025. Parken joined J.P. Morgan in 2005 and has worked closely with this team since 2023. Before that, she spent several years on the European research team and has deep familiarity with the group’s expected return framework, having been closely involved in the day-to-day analysis that underpins it. Her appointment also reflects sensible long-term succession planning.

The depth and breadth of J.P. Morgan’s research function is a key strength, underpinned by an extensive global analyst team. The team members drive idea generation with a focus on non-US firms that score well on balance-sheet strength, profitability, and management quality. They conduct in-depth fundamental research and assign five-year expected return targets.

The process has stayed largely the same over the long term. Though we have seen an increase in the holdings range for International Focus over the past 12 months from 40-50 to 40-60, though individual holdings are still typically capped at 5%. This adjustment reflects the evolving opportunity set in emerging markets and provides more flexibility in managing risk. 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.

Murray has managed this strategy since its November 2011 inception. Since then, through January 2026, the US mutual fund’s I shares returned an annualized 8.45%, beating the MSCI ACWI ex USA's 7.73% and 7.61% return for the US foreign large-blend Morningstar Category peers. While volatility (as measured by standard deviation of returns) was slightly higher than the index's, risk-adjusted returns have been marginally better.

Over 2025, the I share class delivered a strong absolute return of 26.3%, but this was not enough to keep pace with the index and category, which returned 32.0% and 30.4%, respectively. Stock selection was broadly weak across most sectors, with the exception of information technology.

JPM International Focus benefits from a robust and codified investment process designed to fully leverage the firm’s bottom-up research engine, a core differentiator for J.P. Morgan. As such, we retain its High Process rating.

The offering focuses on non-US firms that score well on balance-sheet strength, profitability, and management quality. Idea generation relies on the firm’s vast regional research teams, who conduct in-depth fundamental research and assign five-year expected return targets. Analysts also classify stocks as premium, quality, standard, or challenged, according to the firm's strategic classification framework. Premium and quality names operate in attractive industries with limited external risks and possess strong balance sheets, good management teams, and solid cash flow generation prospects, while standard and challenged names lack durable competitive advantages. Management is willing to pay up for company quality, and about two-thirds of the portfolio is invested in premium and quality names. But valuation is an important consideration as well, keeping the portfolio well balanced from a style perspective (it has tended to land in the core portion of the Morningstar Style Box).

The process has stayed largely the same over the long term. Though we have seen the holdings range for International Focus increase over the past 12 months from 40-50 to 40-60, though individual holdings are still typically capped at 5%. This adjustment reflects the evolving opportunity set in emerging markets and provides more flexibility in managing risk.

This strategy shares many traits with its more diversified sibling JPMorgan International Equity, but there are some differences. JPMorgan International Focus' benchmark is the broader MSCI ACWI ex USA Index (which includes emerging markets), but JPMorgan International Equity is benchmarked to the MSCI EAFE Index, which excludes emerging markets.

Portfolio exposures reinforce that management is cognizant of balancing quality and valuation. 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.

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, full use of that flexibility has been rare in practice. As of December 2025, the strategy’s largest overweights were in financials and industrials, each 4% above the benchmark. In contrast, healthcare and consumer staples were the largest underweights at 2.9% and 2.5% below the benchmark, respectively. Regionally, the team holds a 6% overweight in Europe, including the United Kingdom, which collectively represents around half of the portfolio. Emerging markets account for roughly 25% of the portfolio, which is 6% below the index weight.

There have been several personnel changes since our last review, but the depth and experience of the core management team, supported by a strong and well-resourced analyst group, continue to justify an Above Average People rating.

As of September 2025, Tom Murray has assumed sole lead manager responsibilities for the core-oriented strategies: International Equity, International ADR, and International Focus. At the same time, he stepped down from managing International Growth. Meanwhile, Shane Duffy has remained lead manager for International Growth but has relinquished his roles on International Equity, International ADR, and International Focus.

These shifts are part of a broader initiative to more clearly align portfolio management responsibilities with distinct style cohorts, allowing managers to focus more deeply on their areas of expertise. While clearer distinctions between the core and growth teams are now in place, regular interaction and debate with Shane Duffy and the wider growth team continue.

Murray has led this strategy since its November 2011 launch. He brings 28 years of experience, all with J.P. Morgan, and has managed internationally focused portfolios since 2004. He is supported by comanager Lucy Parken, who was named to the role in September 2025. Parken joined J.P. Morgan in 2005 and has worked closely with this team since 2023. Before that, she spent several years on the European research team and has deep familiarity with the group’s expected return framework, having been closely involved in the day-to-day analysis that underpins it. Her appointment also reflects sensible long-term succession planning.

They form a wider team of four international core managers. They work closely alongside James Sutton and Zenah Shuhaiber, who joined the team in 2020 and 2022, respectively. Sutton joined J.P. Morgan in 2010 and previously served as the team’s metals and mining specialist. Shuhaiber has been with the firm since 2005 and has managed both global and European equity mandates.

The depth and breadth of J.P. Morgan’s research function is another key strength, underpinned by an extensive global analyst team. The managers benefit from access to career analysts based around the world who follow a consistent research framework. This is a notable competitive advantage, and the team makes full and effective use of it. Strong analyst research is fundamental to the strategy’s success, supported by a deep and talented pool of career analysts, a commonly applied research process, and a robust track record in stock selection.

J.P. Morgan continues to build a track record of strong stewardship, supporting a Parent rating upgrade to High from Above Average.

With more than USD 4 trillion in assets under management (including USD 1.3 trillion in money market funds) and a broad reach, J.P. Morgan is among the largest active asset managers in the US, Europe, and Asia. Although some multi-asset offerings have struggled over the past five years, prompting new leadership to make changes to investment teams, its equity and fixed-income teams boast long-tenured portfolio managers who practice repeatable investment processes that have generally produced strong long-term results. Most of its funds are core building blocks with long lifetimes, though its lineup around the world also includes more-specialized options: Two options-based equity-income exchange-traded funds, launched in 2020 and 2022, are now among the firm’s largest. J.P. Morgan has been an early mover in offering active ETFs, having converted 12 of its open-end mutual funds to the structure and launching others. It isn’t always at the forefront of emerging trends. While it has filed registration statements with the Securities and Exchange Commission for an interval fund and an ETF investing in private markets, it hasn’t yet introduced such an option for all investors, whether on its own or in partnership with another asset manager, unlike some of its closest competitors.

To support the firm’s diverse investment offerings, J.P. Morgan has invested heavily in both portfolio management tools and its client organization. Over the past 10 years, the firm has developed robust proprietary technology with advanced analytics and broad buy-in from investment analysts, portfolio traders, and portfolio managers, all of whom have easy access to the platform. The firm also stands apart for its demonstrated commitment to clients. In the early 2000s, J.P. Morgan began pivoting its engagement with financial advisors to adopt a more consultative approach, supported by its sought-after Guide to the Markets research series that focuses on investor education, not product pitches. This perspective can help clients stay the course, supporting positive investor outcomes.

Incentives reinforce alignment with fundholders. Beginning more than 10 years ago, investment team compensation is tied to three-, five-, and 10-year performance, and portfolio managers must invest at least half of their deferred compensation in J.P. Morgan strategies. Many firms encourage portfolio managers to invest alongside fundholders, but J.P. Morgan goes a step further in requiring client-facing individuals to invest substantial portions of their incentive compensation in the funds.

Although some funds still face high cost hurdles, more than half of share classes charge competitive fees relative to peers.

Tom Murray has managed this strategy since its November 2011 inception. Since then, through January 2026, the US mutual fund’s I shares returned an annualized 8.45%, beating the MSCI ACWI ex USA Index's 7.73% and the 7.61% return for the US foreign large-blend category peers. While volatility (as measured by standard deviation of returns) was slightly higher than the index's, risk-adjusted returns have been marginally better.

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 and 2025, when value held up much better than growth.

After a respectable 2023, the strategy had an unexpected poor showing in 2024. The fund gained just 2.6% for the year, lagging the benchmark’s 5.5% as well as 82% of its peers. A primary culprit was poor stock selection in consumer staples, where retailer Wal-Mart de Mexico, brewer Heineken, and food group Nestle detracted. Industrials and information technology were also weak spots owing to construction firm Vinci and conglomerate Samsung Electronics, respectively.

Over 2025, the I share class delivered a strong absolute return of 26.3%, but this was not enough to keep pace with the index and category, which returned 32.0% and 30.4%, respectively. Stock selection was broadly weak across most sectors, with the exception of information technology. Financials and consumer discretionary holdings were the biggest headwinds. From a regional perspective, the United Kingdom was the weakest area, with overweights in names such as 3i Group and London Stock Exchange Group among the largest detractors.

JPMorgan International Focus R2's Prospectus Adjusted Expense Ratio is 1.3% per year. It places it in the most expensive quintile of the Morningstar US Fund Foreign Large Blend Category, where the median fee is 0.82% per year. This cost positioning translates into a Medalist Rating Price Score of -1.79, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.