JPMorgan Unconstrained Debt Fund earns an Above Average Process Pillar rating.
The main contributor to the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 57% also contributes to the process. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Their noteworthy success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by being an actively managed strategy. Historical data, such as Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.
Compared with other funds in the Nontraditional Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the average strategy in the category, the managers have been overweight debt with five- to seven-year maturities in recent years. In the latest month, the strategy has relatively overweighted debt with five- to seven-year maturities compared with its peers as well. Additionally, the managers have exhibited a sector bias towards government bonds over the past few years. Compared with category peers, however, the strategy had less government bonds exposure in the latest month. Finally, during the past few years, the fund leaned away from B rated bonds. In recent months, the strategy also had less exposure to B rated bonds compared to its peers.
This strategy has a modest 3.3% 12-month yield, lower than its average peers' 4.9%. It also has a 4.3% 30-day SEC yield (a measure similar to yield-to-maturity). A lower yield tends to indicate lower credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BB.