JPMorgan Emerging Markets Debt A JEDAX

Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.

The strategy benefits from high portfolio manager retention, providing continuity on the strategy. This earns the team an Average People Pillar rating. The strategy gets an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a considerable underweight position in A rated bonds and has a significant overweight in debt with 20- to 30-year maturities compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

JPMorgan Emerging Markets Debt Fund earns an Average Process Pillar rating.

The leading factor in the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. Management team experience, which averages 18 years at this fund, also bolsters the process. Lastly, the process is limited by the fund's weak long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

Compared with other funds in the Emerging Markets Bond Morningstar Category, this fund consistently is sensitive to interest-rate changes. Opening the analysis to additional factors, the portfolio has displayed three biases over time, whether towards or away from certain fixed-income instruments. Compared with the average strategy in the category, the managers have been meaningfully underweight A rated bonds. Additionally, there's been a notable bias toward debt with 20- to 30-year maturities. And finally, the fund leans away from corporate debt.

This strategy's 12-month yield is 5.9%, which is neck-and-neck with its average peer. Plus, it has a 6.4% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB.

The most important driver of the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average ten-year Morningstar Rating of 3.3 stars. Management team experience, which averages 18 years at this fund, also strengthens the rating. Lastly, the rating is limited because no manager has invested more than$ 1 million in the fund, which would show confidence in the strategy.

There has been limited turnover among the portfolio-management ranks, which has provided stability for the investment strategy. Stability tends to go hand in hand with positive results. There have been no documented departures within the past five years.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse asset classes, the firm has more tightly integrated its capabilities in recent years, notably through the development of proprietary analytical and risk systems. Investment teams are robustly staffed and helmed by seasoned contributors. The firm’s strategies tend to produce reliable portfolios, and several flagship offerings are Morningstar Medalists. Manager incentives align with fundholders'; compensation reflects longer-term performance factors, and portfolio managers invest in the firm’s strategies as part of their compensation plans.

The firm’s funds tend to be well-priced, but they aren’t as competitive as many highly regarded peers of similar scale. Recent product launches include thematic and single-country strategies, both of which carry the potential for volatile performance and flows, along with misuse by investors. The firm remains intrepid when it comes to developing an environmental, social, and governance-focused framework and continues to move into other areas such as direct indexing through its 55iP acquisition and China through its joint venture, but these complicated initiatives take time to assess any real and lasting effect.

Over the past 10-year period, this share class' 1.4% return was about even with the average peer's performance. It trailed the category benchmark, JPMorgan Emerging Markets Global Diversified Bond Index, by an annualized 1.6 percentage points over the same period.

Finally, the share class proved itself effective by generating positive alpha, over the same 10-year period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

This share class lands in the second-costliest quintile of its Morningstar Category. Its unattractive expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class could struggle to produce positive alpha against its category benchmark, leading to its Morningstar Medalist Rating of Neutral.