JPMorgan Core Bond brings it home with a seasoned team and sensible process. Its cheapest share classes earn a Morningstar Analyst Rating of Silver while its more expensive receive Bronze or Neutral.
Portfolio manager Rick Figuly, a multidecade firm veteran and head of JPMorgan’s core bond team, leads this effort with the support of manager Justin Rucker and under the oversight of fixed income CIO Steve Lear. Figuly and Rucker work alongside a broader group of seasoned portfolio managers who have, in some cases, spent decades working together in Columbus, Ohio, and have built up a strong record of selecting attractively valued securities that generate strong cash flows. Their supporting credit research, trading, and operational resources, based across the United States and beyond, are robust and becoming more closely integrated.
Rather than take on significant interest-rate or credit risk (the managers keep the strategy’s duration within 10% of the Bloomberg Barclays U.S. Aggregate Bond Index and only purchase investment-grade fare), the team seeks to outperform its intermediate core bond Morningstar Category rivals by focusing on sensible sector rotation and security selection. Functionally, this has led the managers historically to emphasize securitized fare far more than its typical category rival or bogy. This allocation has included everything from plain-vanilla mortgage passthroughs to out-of-benchmark agency collateralized mortgage obligations, nonagency mortgages, and securitized credit. While the fund will also own investment-grade corporates, the team keeps below-investment-grade fare to a minimum.
The managers’ mortgage mantra means that the strategy will trail credit-focused peers when markets are on the upswing. Over the trailing 10 years ended March 2021, its institutional share class posted a middling 3.5% result. That said, its resiliency when these same markets have stuttered contributed to a significantly lower level of volatility (as measured by standard deviation) over the same period.