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JPMorgan National Municipal Income C JITCX

Quantitative rating as of
  • NAV / 1-Day Return 10.08  /  0.00
  • Total Assets 3.5 Bil
  • Adj. Expense Ratio
    1.200%
  • Expense Ratio 1.200%
  • Distribution Fee Level Low
  • Share Class Type Level Load
  • Category Muni National Interm
  • Credit Quality / Interest Rate Sensitivity Medium / Moderate
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 1.99%
  • Effective Duration 5.40 years
unlocked

Morningstar’s Analysis JITCX

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 Neutral ratings to strategies they’re not confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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JPMorgan National Municipal Income C boasts strong Process and People Pillar ratings, but other weaknesses hold this strategy's Morningstar Quantitative Rating at Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the highest quintile among peers.

The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in AA rated bonds and debt with 10- to 15-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 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 National Municipal Income Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Muni National Interm Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity. 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 overweight position on AA rated bonds compared to peers. Additionally, there's been a bias toward debt with 10- to 15-year maturities. And finally, the fund does not consistently lean toward or away from corporate bonds, but the current portfolio is underweight its peers.

This strategy has a modest 1.9% 12-month yield, lower than its average peer's 2.1%. It also has a 2.9% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk. However, that's not the case here. The portfolio favors lower-quality credit with an average of BBB, compared with the typical peer's A and its non-investment grade stake is 3% of assets, compared to its peers' 1%. Higher credit risk strategies tend to pay off most when markets are hot.

People

| Above Average |

JPMorgan National Municipal Income Fund benefits from a stable team and experienced portfolio managers, warranting an Above Average People Pillar rating. David Sivinski, the longest-tenured manager on the strategy, provides strong guidance, offering over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.8 stars, demonstrating underwhelming risk-adjusted performance. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 24 years of portfolio management experience. There has been limited turnover among the portfolio-management ranks, which has provided stability for the investment strategy. Stability tends to go hand in hand with positive results. There have been no documented departures within the past 10 years.

Parent

| Above Average |

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.

Performance

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Performance-wise, this strategy’s C share class, with returns reported in US Dollar, has demonstrated it is weak over a full market cycle, with inferior returns compared with category peers, even after adjusting for risk. The share class turned out a lower Sharpe ratio, a measure of risk-adjusted returns, compared with the category index, Bloomberg Barclays Municipal 1-15 Year Bond Index, over the trailing 10-year period. These subpar risk-adjusted results have not resulted in the drawback of a bumpier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. Finally, the share class proved itself ineffective as it was unable to generate alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

The fund continues to have a disappointing track record viewed through the lens of long-term absolute returns. The share class underperformed the category index by an annualized 1.3 percentage points over the past 10 years. The picture is also bleak when comparing it with peers. The fund trailed the category average by an annualized 91 basis points over the same 10-year period.

Price

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It is imperative to evaluate fees, which compound over time and reduce returns. This share class sits in the costliest quintile of its Morningstar Category. Its unattractive expense ratio, in conjunction with the fund’s People, Process, and Parent Pillars, suggests that this share class does not offer investors a good chance to capture positive alpha relative to its category benchmark, explaining its Morningstar Quantitative Rating of Neutral.