JPMorgan Short-Interm Muncpl Bd I JIMIX

A sound investment process and strong management team underpin JPMorgan Short-Interm Muncpl Bd I's Morningstar Quantitative Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.

The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in AAA rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy's management team has a high retention rate, which helps continuity and earns it an Above Average People Pillar rating. The strategy is part of a first-rate parent, as shown by a competitive lineup success ratio and overall affordable fees. These attributes support its Above Average Parent Pillar rating.

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. JPMorgan Short-Intermediate Muncpl Bd Fd earns an Above Average Process Pillar rating.

Compared with other funds in the Muni National Short 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 underweight position on AAA rated bonds compared to peers. Additionally, there's been a bias away from debt with 20- to 30-year maturities. And finally, the fund does not consistently lean toward or away from corporate debt, but the current portfolio is underweight its peers.

This strategy has a 1.7% 12-month yield, higher than its average peer's 1.0%. It also has a 3.0% 30-day SEC yield (a measure similar to yield-to-maturity). 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 A.

Despite managers' lack of personal investments, JPMorgan Short-Intermediate Muncpl Bd Fd benefits from limited portfolio manager turnover. As the latter outweighs the former, the strategy earns an Above Average People Pillar rating. Kevin M. Ellis, the longest-tenured manager on the strategy, boasts 18 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, demonstrating underwhelming risk-adjusted performance. Kevin M. Ellis has an experienced listed co-manager. Together, they average 17 years of portfolio management experience. The management team has provided the fund with commendable continuity. There have been no documented departures within the past 10 years. None of the portfolio managers here invests in this fund. This hurts the rating because it suggests the team has little confidence the fund can deliver for investors, and that the alignment of managers' interests with those of the strategy's investors could be far better than it is.

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.

This strategy's Institutional share class' long-term performance is mixed depending on the yardstick used. It has provided superior returns compared with peers, but similar returns compared with the category benchmark. Over a 10-year period, this share class outperformed the category’s average return by 24 basis points annualized. But despite the above-average returns against peers, it mirrored the category index, Bloomberg Barclays Municipal 3 Year 2-4 Year Maturity Bond Index over an eight-year and 10-year period.

When adjusting for risk, the fund is not as favorable. 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 stayed in line with 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.

Returns vary from period to period, but expenses are always subtracted. It is good practice to weigh them heavily in any investment evaluation. This share class is in the cheapest quintile of its Morningstar Category. Its affordable fee, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class has high potential to deliver positive alpha compared with its category benchmark, leading to its Morningstar Quantitative Rating of Bronze.