JPMorgan Large Cap Value R2 JLVZX

A strong management team and sound investment process underpin JPMorgan Large Cap Value R2's Morningstar Quantitative Rating of Silver. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.

Confidence in the strategy's portfolio management drives a High People Pillar rating. The strategy's sensible investment philosophy 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 is part of a first-rate parent, as shown by a high lineup success ratio and overall low fees. These attributes support its Above Average Parent Pillar rating.

Morningstar's evaluation of this fund's process aims to determine whether it has been applied consistently over time, as demonstrated by the portfolio's composition, its suitability for different types of investors, and expectations for performance in diverse market conditions, assuming the process is adhered to. JPMorgan Large Cap Value Fund earns an Above Average Process Pillar rating.

This strategy tends to pick smaller market-cap firms compared with the average fund in its peer group, the Large Value Morningstar Category. But in terms of investment style, the strategy is on par with peers. Looking at additional factor exposure, the managers currently do not favor or avoid liquidity risk; the portfolio is about as liquid as other equity funds. 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. This strategy also has a portfolio favoring low-quality stocks. This means the fund avoids holding companies that are consistently profitable, growing, and have solid balance sheets. Lacking this ballast, the fund's prospects will rest on its ability to surpass peers during economic booms. 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 healthcare and energy relative to the average peer in its category by 3.4 and 2.6 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are technology and consumer cyclical, with technology underweighting the average portfolio by 7.2 percentage points of assets and consumer cyclical similar to the average. The portfolio is composed of 87 holdings and is about as top-heavy as the category average, with 31.3% of assets in the top 10 holdings. And finally, 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.

With only one listed portfolio manager, JPMorgan Large Cap Value Fund opens itself to increased key-person risk. However, they have proven themself effective at managing the strategy, earning the strategy a High People Pillar rating. Scott Blasdell brings over 25 years of portfolio management experience to the table. Across strategies managed, Blasdell averages a Morningstar Rating of 3.7, 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.

Outpacing both its peers and the category benchmark, this strategy’s Retirement share class, has had a noteworthy track record. This share class led its average peer by an annualized excess return of 2.3 percentage points over a 10-year period. And it also exceeded the category benchmark's, Russell 1000 Value Index's, gain by an annualized 1.8 percentage points over the same period. Although the overall rating does not hinge on one-year performance, its impressive 12.3% return is worth mentioning, an 8.0-percentage-point lead over its average peer, placing it within the top 10% of its category.

When adjusting for risk, the fund is not as favorable. The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. The strategy also took on elevated risk, contributing to the bad outcome for investors. Specifically, the fund had a higher standard deviation, 18.1%, compared with the benchmark, 14.9%. 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.

Low-cost investments routinely outperform high-cost investments. Thus, assessing cost is a critical step in any investment evaluation. This share class imposes a fee that places it in its Morningstar Category's second-costliest quintile. Despite this fee, the fund’s People, Process, and Parent Pillars indicate this share class can produce positive alpha relative to its category benchmark, earning it a Morningstar Quantitative Rating of Silver.