JPMorgan Managed Income L JMGIX

A sound investment process and strong management team underpin JPMorgan Managed Income L's Morningstar Quantitative Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in government bonds and debt with 20- to 30-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 has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a favorable lineup success ratio and overall affordable fees.

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. JPMorgan Managed Income Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Ultrashort Bond 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, the managers have displayed an underweight position on government bonds. Additionally, there's been a bias away from debt with 20- to 30-year maturities. And finally, the fund leans meaningfully toward A rated bonds.

This strategy has a modest 1.3% 12-month yield, lower than its average peer's 1.8%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.3%. A lower yield tends to indicate lower credit risk. The portfolio has a higher average surveyed credit quality, A, compared with the category average's BB and it holds no non-investment grade assets, despite the average peers' 4%. Strategies that take on less credit risk can often shoulder more-adverse market conditions.

Even with managers' lack of personal investments, the team managing JPMorgan Managed Income Fund stands out with limited portfolio manager turnover. This strength bolsters the strategy's Above Average People Pillar rating. David N. Martucci, the longest-tenured manager on the strategy, provides strong guidance, offering 22 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 4.3 stars, demonstrating stellar risk-adjusted performance. David N. Martucci is supported by an experienced team, being able to draw on three additional listed managers, who average 11 years of portfolio management experience. As a team, they manage four investment vehicles together, with a Silver asset-weighted average combined Morningstar Analyst and Quantitative Rating, indicating the potential to deliver positive alpha in aggregate. The management team has provided the fund with commendable continuity. There have been no documented departures within the past five years. None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

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, holding even with its peers and outlasting the category benchmark. Over a 10-year period, this share class' 1.1% gain mirrored the category's average return. And it outperformed the category index's, Bloomberg Barclays Government/Corporate 1 Year Duration Bond Index's, gain by an annualized 43 basis points over the same period.

The risk-adjusted performance only continues to make a case for this fund. The share class led the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing 10-year period. Often, higher returns are associated with more risk. However, this strategy hewed close to the benchmark's standard deviation. Finally, the share class proved itself effective by generating positive 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 is in the second-cheapest quintile of its Morningstar Category. Its attractive expense ratio, taken together with the fund’s People, Process, and Parent Pillars, results in a judgment that this share class has the ability to deliver positive alpha versus its category benchmark, leading to its Morningstar Quantitative Rating of Silver.