JPMorgan Mid Cap Equity C JMCCX

Strength in JPMorgan Mid Cap Equity C's Process Pillaris partially offset by an Average People Pillar rating, leading to a Morningstar Quantitative Rating of 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 benefits from the longest-tenured manager on the team's lengthy experience. This is a positive driver of the strategy's Average People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. The portfolio is currently underweight momentum exposure and volatility exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And low volatility exposure is rooted in stocks that have a lower 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 reasonable 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 Mid Cap Equity Fund earns an Above Average Process Pillar rating.

This strategy skews toward larger, more growth-oriented companies than its average peer in the Mid-Cap Blend Morningstar Category. Looking at additional factor exposure, the managers do not tilt toward or away from high-momentum stocks; the current portfolio has about as much momentum exposure as other funds. Momentum investors count on recently outperforming stocks to continue to do so, and underperforming shares to keep disappointing. The managers do not tilt toward or away from the volatility factor; the current portfolio has about average exposure compared with others in the equity strategies universe. Additionally, this strategy is about as exposed to the yield factor as other equity strategies. 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 financial services and healthcare relative to the average peer in its category by 4.4 and 3.5 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are basic materials and industrials, with basic materials underweighting the average portfolio by 3.4 percentage points of assets and industrials similar to the average. The portfolio is composed of 207 holdings and is less top-heavy than peers. Specifically, 11.4% of the fund’s assets are concentrated within the top 10 fund holdings, as opposed to the category’s 16.3% average. And finally, 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.

Even with its managers' lack of personal investment, the team managing JPMorgan Mid Cap Equity Fund stands out with a market-tested longest-tenured manager. Taken together, the strategy earns an Average People Pillar rating. The team is backed by Jonathan K.L. Simon, the longest-tenured manager on the strategy, who brings over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.7 stars, demonstrating above-average risk-adjusted performance. Jonathan K.L. Simon is supported by an experienced team, being able to draw on four additional listed managers, who average 20 years of portfolio management experience. None of the portfolio managers here invests in this fund. This hurts the rating because it suggests the team has little confidence the fund can deliver for investors, and that the alignment of managers' interests with those of the strategy's investors could be greatly improved.

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 C share class has endured varying fortunes. It has been strong over the short term but has been weak over the long term. Over the past five years, the fund outperformed the category index, the Russell Midcap Index, by 47 basis points, and exceeded the category's average return by 84 basis points. More importantly, when looking across a longer horizon, the fund’s performance looks bleak. On a 10-year basis, this share class trailed the index by an annualized 29 basis points.

The share class had a higher Sharpe ratio, a measure of risk-adjusted return, than the index over the trailing 10-year period. Notably, these strong risk-adjusted results have not come with a rockier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation.

By minimizing expenses, investors can maximize their expected returns. This share class lands in the costliest quintile of its Morningstar Category. Its steep expense ratio, in conjunction with the fund’s People, Process, and Parent Pillars, indicates that this share class does not offer investors a good chance to capture positive alpha versus its category benchmark, explaining its Morningstar Quantitative Rating of Neutral.