Morningstar's style-agnostic investment process evaluation looks for strategies with a philosophy distinctive enough to generate excellent results in the future. JPMorgan Small Cap Growth Fund earns an Above Average Process Pillar rating.
This strategy is similar to its Small Growth category peers in terms of market-cap and style exposure. Looking at 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. This strategy also has an overweight bias to the volatility factor, meaning investing in stocks that have a higher historical standard deviation of returns. This contributes to a high-risk, high-reward approach. And compared with category peers, the strategy historically has had more exposure. Additionally, this strategy holds highly liquid companies. More liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market sell-offs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to experience a significant loss. 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 positioned across 130 holdings and assets are more dispersed than the typical peer in the category. In the most recent disclosure, 17.6% of the portfolio's assets were concentrated in the top 10 fund holdings, compared to the category’s 26.5% average. And in closing, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.