JPMorgan Diversified Fund earns an Above Average Process Pillar rating.
The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 59%. 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. Noteworthy risk-adjusted performance also bolsters the process. 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.
This strategy produces a fixed-income weighting that hews closely to the typical Moderate Allocation peer but holds more assets in equities, with a 34% to 60% fixed-income to equity composition. Its equity sleeve has been persistently biased to growth stocks versus the category average. Although in terms of market-cap exposure, it moves close to the rest of the pack. The strategy has three region or sector biases compared to category peers. The most meaningful exposure is to the Developed Europe region, where the portfolio is typically overallocated. It also maintains an overweight position in the financial services sector. And finally, the portfolio has been underweight in developed markets regions compared with peers.
The portfolio is overweight in financial services by 4.1 percentage points in terms of assets compared with the category average, and its industrials allocation is similar to the category. The sectors with low exposure compared to category peers are healthcare and communication services; however, the allocations are similar to the category. The portfolio is overweight in Developed Europe and United Kingdom regions relative to the category average by 8.1 percentage points and 2.7 percentage points, respectively. The regions with low exposure compared to their category peers are North America and Middle East and Africa, with North America underweight the average by 16.2 percentage points and Middle East and Africa
similar to the average.