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JPMorgan Emerging Markets Debt R5 JEMRX

Quantitative rating as of
  • NAV / 1-Day Return 6.22  /  0.81 %
  • Total Assets 524.9 Mil
  • Adj. Expense Ratio
  • Expense Ratio 0.800%
  • Distribution Fee Level Average
  • Share Class Type Retirement, Large
  • Category Emerging Markets Bond
  • Credit Quality / Interest Rate Sensitivity Low / Extensive
  • Min. Initial Investment 0
  • Status Open
  • TTM Yield 6.13%
  • Effective Duration 6.93 years
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Morningstar’s Analysis JEMRX

Quantitative rating as of .

The Morningstar Quantitative Rating for funds is analogous to the rating our analyst might assign to the fund if they covered it.

Our analysts assign Neutral ratings to strategies they’re not confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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JPMorgan Emerging Markets Debt R5's Average Process Pillar and People Pillar ratings hold this strategy's Morningstar Quantitative Rating of Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy receives an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in A rated bonds and an overweight in debt with 20- to 30-year maturities compared with category peers. The strategy retains its portfolio managers but still earns an Average People Pillar rating. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a favorable lineup success ratio and overall affordable fees.

Process

| Average |

Morningstar's style-agnostic investment process evaluation looks for strategies with a philosophy distinctive enough to generate standout results in the future. JPMorgan Emerging Markets Debt Fund earns an Average Process Pillar rating.

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, over time, has displayed three biases whether toward or away from certain fixed-income instruments. First, managers have shown a consistent large underweight position on A rated bonds compared to peers. Additionally, there's been a notable overweight position in debt with 20- to 30-year maturities. And finally, the fund leans away from corporate debt.

This strategy has a 5.8% 12-month yield, higher than its average peer's 5.1%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 7.8%. Typically, higher yields come at the cost of higher credit risk. Yet that's not the case here. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB.

People

| Average |

The team at JPMorgan Emerging Markets Debt Fund has the benefit of a lack of team turnover and an experienced corps of managers, but is still relatively unexceptional, earning the strategy an Average People Pillar rating. The team is backed by Pierre-Yves Bareau, the longest-tenured manager on the strategy, who brings over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.4 stars, demonstrating they can provide value for investors on a risk-adjusted basis. Pierre-Yves Bareau has an experienced listed co-manager. Together, they average 18 years of portfolio management experience. As a team, they manage two investment vehicles together, with an asset-weighted average Neutral combined Morningstar Analyst and Quantitative Rating. This means, in aggregate, the team falls short and will struggle to produce positive alpha. The management team has provided the fund with commendable continuity. There have been no documented departures within the past five years.

Parent

| Above Average |

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various cohorts globally and a diverse set of 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.

Performance

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This strategy’s Retirement share class' long-term performance is mixed depending on its comparison point. It has provided better returns compared with peers, but subpar returns compared with the category benchmark. This share class led its average peer by an annualized excess return of 48 basis points over a 10-year period. However, it was not able to clear the hurdle of outperforming the category index, JPMorgan Emerging Markets Global Diversified Bond Index. It trailed by an annualized 1.2 percentage points over the same period.

When adjusting for risk, this fund is not compelling. The share class failed to beat the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. But notably, these subpar risk-adjusted results have not come with a rockier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. Finally, the share class proved itself ineffective as it was unable to generate alpha, over the same 10-year period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

Price

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By minimizing costs, investors can maximize their expected returns. This share class charges a fee that ranks in its Morningstar Category's second-cheapest quintile. Despite this fee, the fund’s People, Process, and Parent Pillars indicate this share class is unlikely to deliver positive alpha relative to its category benchmark, earning it a Morningstar Quantitative Rating of Neutral.