JPMorgan Large Cap Value R5 JLVRX

A strong management team and sound investment process underpin JPMorgan Large Cap Value R5's Morningstar Quantitative Rating of Gold. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.

Confidence in the strategy's portfolio management drives a High People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. The portfolio has overweighted liquidity exposure and has an underweight in quality exposure compared with category peers. High liquidity exposure is attributed to stocks with a high trading volume, lending managers more flexibility. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a favorable lineup success ratio and overall attractive fees.

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 Large Cap Value Fund 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 style (value/growth) exposure, the strategy does not have much of a bias and resembles the category's typical portfolio. Analyzing additional factors, this strategy has about as much exposure to liquidity risk as others in the equity fund universe. Liquid stocks are easier to buy and sell without moving their prices and tend to act as ballast during market sell-offs. However, compared with Morningstar Category peers historically, the strategy is more exposed to the factor. The strategy also has relatively low exposure to the quality factor. This means the fund has avoided holding companies that are consistently profitable, growing, and have solid balance sheets. Although this orientation may be beneficial when the market is hot, it could contribute to a rocky portfolio during a downturn. And compared with category peers, the strategy historically has had less exposure. Additionally, the managers do not tilt in favor of high- or low-volatility stocks, the current portfolio is about as exposed as others in the equity fund universe. However, 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 industrials by 2.5 percentage points in terms of assets compared with the average portfolio in the category, and its energy allocation is similar to the category. The sectors with low exposure compared to their category peers are technology and consumer cyclical, with technology underweighting the average portfolio by 7.1 percentage points of assets and consumer cyclical similar to the average. The portfolio is positioned across 93 holdings and is diversified among those holdings. In its most recent portfolio, 28.5% of the strategy's assets were concentrated in the top 10 fund holdings, compared to the category average's 31.0%. And in closing, in terms of portfolio turnover, this fund trades more frequently than its average peer, potentially racking up additional expenses for investors and creating a drag on performance.

JPMorgan Large Cap Value Fund earns a High People Pillar rating as the solo portfolio manager listed has distinguished themself in a competitive industry. Scott Blasdell brings over 25 years of portfolio management experience to the table. Across strategies managed, Blasdell averages a Morningstar Rating of 3.4, indicating above-average risk-adjusted performance. Isolating the analysis to the fund at hand, Scott Blasdell has delivered superior performance, outperforming both the category benchmark and average category peer for the past nine-year period.

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 held up nicely, outlasting both its peers and the category benchmark. Over a 10-year period, this share class outpaced the category's average return by 2.8 percentage points annualized. And it also beat the category index's, Russell 1000 Value Index's, gain by an annualized 2.4 percentage points over the same period. Although the overall rating does not hinge on one-year performance, its impressive 0.01% return is worth mentioning, a 6.0-percentage-point lead over its average peer, placing it within the top 10% of its category.

The risk-adjusted performance only continues to make a case for this fund. The share class outstripped the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing 10-year period. However, these strong risk-adjusted results have come with a cost--a rockier ride for investors. This strategy took on elevated risk, as measured by a higher standard deviation, 18.2%, to the benchmark's 15.0%. However, 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.

It is important for investors to be on guard for fees, as they are essentially negative alpha. This share class lands in the cheapest quintile of its Morningstar Category. Its attractive expense ratio, taken together with the fund’s People, Process, and Parent Pillars, indicates that this share class is well-positioned to generate positive alpha versus its category benchmark, leading to its Morningstar Quantitative Rating of Gold.