JPMorgan U.S. Applied Data Sci Val R6 JIVMX

JPMorgan U.S. Applied Data Sci Val R6’s strong process and parent firm are the foundation for this strategy'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 sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in liquidity exposure and volatility exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a favorable lineup success ratio and overall attractive fees. Finally, this strategy's limited portfolio manager turnover earns the team an Average People Pillar rating.

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 U.S. Applied Data Science Value earns an Above Average Process Pillar rating.

This strategy targets smaller plays than its peers’ average in the Large Value Morningstar Category. But in terms of investment style, the strategy is on par with peers. Looking at additional factor exposure, this fund tilts toward stocks with low trading volumes, which can be harder to trade than more-liquid holdings, particularly during periods of market stress. However, compared with Morningstar Category peers historically, the strategy is more exposed to the factor. This strategy has also tilted toward low-volatility stocks, meaning those that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. But when compared with category peers, the strategy has historically had more exposure. Additionally, this strategy's holdings include more companies with high dividend or buyback yields. Stocks with high yield exposure tend to be more mature, stable businesses, though some offer high yields because their earnings and share prices have plunged. Extreme business or market conditions also can cause either kind of company to suspend or cut their payouts. 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 has allocations in its top 2 sectors, industrials and financial services, that are similar to the average portfolio in the category. The sectors with low exposure compared to their category peers are technology and consumer defensive, with technology underweighting the average portfolio by 4.0 percentage points of assets and consumer defensive similar to the average. The portfolio is positioned across 97 holdings and is less top-heavy than peers. Specifically, 23.4% of the portfolio's assets are concentrated within the top 10 fund holdings, as opposed to the category average's 31.0%. And in closing, in terms of portfolio turnover, this fund trades less regularly than the typical peer in its category, which may result in a lower cost to investors.

JPMorgan U.S. Applied Data Science Value doesn't differentiate itself much with standard team turnover and a corps of managers with average experience. This warrants an Average People Pillar rating. Wonseok Choi, the longest-tenured manager on the strategy, provides strong guidance, offering 17 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, demonstrating average risk-adjusted performance. Wonseok Choi draws on only two other listed supporting managers. Although, together they are adequately equipped, with seven years of average portfolio management experience. The fund has had about average portfolio manager turnover compared to other teams. Long-term stability strengthens a team's rating as it tends to support positive results. However, the most recent documented departure was 17 months ago.

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 Retirement share class has had murky performance, with mixed long-term performance compared with peers and the category benchmark. This share class mirrored the category average's 7.4% return over the eight-year period and its 10.6% return over a 10-year period. It also failed to separate itself from the category index, Russell 1000 Value Index, where it was on par with the index over an eight-year period and exceeded the index on an annualized basis by 33 basis points over a 10-year period.

The share class failed to beat the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. This subpar risk-adjusted performance has not resulted in higher volatility, as measured by their standard deviation, which is close to the benchmark. 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.

Because fees compound over time and diminish returns, it is critical for investors to minimize expenses. This share class is within the cheapest quintile of its Morningstar Category. Its affordable expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class is well-positioned to generate positive alpha relative to its category benchmark, leading to its Morningstar Quantitative Rating of Bronze.