JPMorgan Government Bond’s experienced securitized specialists follow a disciplined process focused on mortgage-centric government bonds; the strategy earns a Morningstar Analyst Rating of Silver for its cheapest share classes and Bronze and Neutral for its most expensive.
This team’s experience, depth, and expertise in agency mortgage-backed securities differentiates this team versus rivals. Comanagers Michael Sais, who has been with this fund since 1996, and Robert Manning, who joined in 2013, lead this effort and benefit from the support of JPMorgan’s large team of value-driven portfolio managers and fundamental analysts based in Columbus, Ohio, and New York.
The team’s heavy emphasis on agency mortgage-backed securities stands out versus its U.S. Treasury-focused benchmark and intermediate government Morningstar Category peers, and it relies on these sector differences to add value. While the process begins with JPMorgan’s quarterly investment committee to form its three- to six-month macro outlook, weekly sector meetings and daily interactions drive decision-making here. Sais and Manning apply their rigorous fundamental analysis to agency mortgage-backed securities of varying types and structures. Agency-backed residential and commercial mortgages (45%-65%) typically comprise the lion’s share of the portfolio, with U.S. Treasuries (15%-30%) and agency debt (3%-20%) taking a supporting role. While many of its peers emphasize more-traditional MBS passthroughs and hold smaller U.S. Treasury stakes, this team seeks to control duration extension and contraction by emphasizing collateralized mortgage obligations or commercial mortgage-backed securities that minimize prepayment sensitivity and with more predictable cash flows.
The comanagers have successfully used their security-selection acumen to seek pass-throughs with strong fundamentals and to rotate between residential and commercial CMOs where they perceive attractive relative valuations. From January 1997 through August 2022, the Institutional share class generated 4.2% annualized, landing in the top decile of its distinct category peers. However, the ride here may be bumpier at times versus shorter duration rivals.