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JPMorgan International Value I JIESX

Quantitative rating as of
NAV / 1-Day Return
12.18  /  0.08 %
Total Assets
401.3 Mil
Adj. Expense Ratio
0.750%
Expense Ratio
0.750%
Distribution Fee Level
Below Average
Share Class Type
Institutional
Category
Foreign Large Value
Investment Style
Large Value
Min. Initial Investment
1,000,000
Status
Open
TTM Yield
6.34%
Turnover
33%
unlocked

Morningstar’s Analysis JIESX

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 Silver ratings to strategies that they have high conviction will outperform a relevant index, or most peers, over a market cycle.

Summary

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A strong management team and sound investment process underpin JPMorgan International Value I's Morningstar Quantitative Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the second-lowest fee quintile among peers.

The strategy's managers invest alongside shareholders, which helps it earn an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. The portfolio has been significantly underweight quality exposure and has an overweight in yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy is part of a first-rate parent, as shown by a competitive lineup success ratio and overall attractive fees. These attributes support its Above Average Parent Pillar rating.

Process

| Above Average |

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 International Value Fund earns an Above Average Process Pillar rating.

This strategy tends to hold smaller, more value-oriented companies than its average peer in the Foreign Large Value Morningstar Category. Analyzing additional factors, 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 tended to overweight yield, shown by the portfolio's high exposure to dividends or buybacks. Higher-yielding stocks can increase income, but some dividend-payers also might cut their payouts when earnings fall. And compared with category peers, the strategy historically has had more exposure. Additionally, this strategy has exhibited a tilt toward high-volatility stocks, meaning companies that have a higher historical standard deviation of returns. Volatility exposure tends to pay off most prominently when markets are hot. 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 financial services and energy relative to the average peer in its category by 12.1 and 5.2 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are consumer defensive and technology, underweight the average by 6.2 and 5.4 percentage points of assets, respectively. The portfolio is positioned across 237 holdings and is quite concentrated. Specifically, 19.3% of the strategy's assets are housed within the top 10 holdings, versus the category’s 13.4% average.

People

| Above Average |

JPMorgan International Value Fund's personal investments from managers and experienced portfolio managers drives the strategy's Above Average People Pillar rating. Michael Barakos’s veteran status, with over 25 years of portfolio management experience, imprints a positive mark on the strategy as it brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, demonstrating average risk-adjusted performance. Michael Barakos is supported by an experienced team, being able to draw on three additional listed managers, who average 16 years of portfolio management experience. The management team is invested in the fund, but the maximum investment by any manager is between $500,000 and $1 million. An investment of more than $1 million would be ideal to align managers' interests with those of the fund's investors.

Parent

| Above Average |

J.P. Morgan Asset Management’s strong investment culture, which shows through its long-tenured, well-aligned portfolio managers and deep analytical resources, supports a renewed Above Average Parent rating.

Across asset classes and regions, the firm's diverse lineup features many Morningstar Medalists, such as its highly regarded U.S. equity income strategy that’s available globally. There's been some turnover in the multi-asset team recently, but it remains deeply resourced and experienced. Manager retention and tenure rates, and degree of alignment for U.S. mutual funds compare favorably among the competition. Managers' compensation emphasizes fund ownership over stock ownership, which is distinctive for a public company.

The firm continues to streamline its lineup and integrate its resources further. For instance, in late 2019, the multi-asset solutions division combined with the passive capabilities. The firm hasn’t launched trendy offerings as it’s mostly expanded its passive business lately, but acquisition-related redundancies and more hazardous launches in the past weigh on its success ratio, which measures the percentage of funds that have both survived and outperformed peers. Fees are regularly reviewed downward globally; they're relatively cheaper in the U.S. than abroad. Also, the firm is building its ESG capabilities and supports distinctive initiatives on diversity.

Performance

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This strategy's Institutional share class has not kept up with its peers or the category benchmark. Over a 10-year period, this share class undershot its average peer by 94 basis points annualized. It was also not able to clear the hurdle set by the category index, MSCI ACWI ex USA Value Index, where it trailed by an annualized 14 basis points over the same period.

Even when adjusting for risk, the fund does not hold up. The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. However, this strategy hewed close to the benchmark's 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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It is critical to evaluate expenses, as they are subtracted directly out of returns. This share class is within the second-cheapest quintile of its Morningstar Category. Its attractive fee, paired with the fund’s People, Process, and Parent Pillars, results in a judgment that this share class is well-positioned to generate positive alpha against its category benchmark, leading to its Morningstar Quantitative Rating of Silver.