Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. JPMorgan Small Cap Growth Fund earns an Above Average Process Pillar rating.
This strategy hews closely to the market-cap and investment style of its Small Growth category peers. Examining additional factor exposure, this strategy favors low-quality stocks. Such positions do not tend to provide much ballast for a portfolio. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. The managers have also shown an overweight risk tilt, demonstrated by high-volatility exposure. These stocks are at their best when markets are as well. High-volatility exposure contributes to stronger performance during bull markets at the cost of losing more on the downside. And compared with category peers, the strategy historically has had more exposure. Additionally, given the high trading volume of holdings, this fund holds highly liquid assets. The strategy has chosen to offer investors a relatively safer harbor, although there is some evidence to indicate investors earn a premium for bearing this risk. And the portfolio has more exposure than its Morningstar Category peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.
The portfolio is overweight in consumer cyclical and healthcare relative to the average peer in its category by 4.0 and 3.5 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are financial services and basic materials, with financial services underweighting the average portfolio by 5.1 percentage points of assets and basic materials similar to the average. The portfolio is composed of 130 holdings and assets are more dispersed than the typical peer in the category. In the most recent disclosure, 17.6% of the fund’s assets were concentrated in the top 10 fund holdings, as opposed to the category average's 26.5%. And in closing, in terms of portfolio turnover, this fund trades less frequently than the category’s average, potentially limiting costs to investors.