JPMorgan Managed Income I JMGLX

The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

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 a significant underweight position in AAA rated bonds and government bonds compared with category peers. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

JPMorgan Managed Income Fund earns an Above Average Process Pillar rating.

The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 57%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Impressive risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

Compared with other funds in the Ultrashort Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been meaningfully underweight AAA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AAA rated bonds compared with Morningstar Category peers. Additionally, the fund has exhibited a sector bias away from government bonds over the past few years. Similarly, in recent months, the strategy also had less exposure to government bonds than peers. Finally, during the past few years, the fund leaned meaningfully away from debt with 20- to 30-year maturities. In recent months, the strategy also had less exposure to debt with 20- to 30-year maturities compared to its peers.

This strategy's 12-month yield is 4.7%, which is near its average peer. In addition, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 5.1%. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

David N. Martucci, the longest-tenured manager on the strategy, boasts 24 years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.8 stars, demonstrating disappointing risk-adjusted performance compared with category peers. The team boasts an experienced corps of listed portfolio managers, with three others supporting David N. Martucci. Together, they average 12 years of listed portfolio management experience. As a team, they manage four investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. The team has successfully retained portfolio-manager talent, providing continuity for strategies as long-term stability tends to support positive results. There have been no documented departures within the past 10 years.

Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse 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.

Narrowing in on the past three-year period, it beat the category index, the Bloomberg Barclays Government/ Corporate 1 Year Duration Bond Index, by an annualized 1.8 percentage points, but matched its average peer. And more importantly, when extended to a longer time frame, the strategy surpassed the index. On a five-year basis, it outperformed the index by an annualized 68 basis points. One-year performance does not largely affect the share class' rating. However, its 4.9% return is worth mentioning, undershooting its average peer by 91 basis points and placing it within the bottom 10% of its peer group.

The risk-adjusted performance only continues to make a case for this fund. The share class had a higher Sharpe ratio, a measure of risk-adjusted return, than the index over the trailing five-year period. Notably, these strong risk-adjusted results have not come with more volatility for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. However, the share class proved itself ineffective as it was unable to generate alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

This share class levies a fee that ranks in its Morningstar Category's middle quintile. Even with this fee, the fund’s People, Process, and Parent Pillars suggest this share class has the potential to deliver positive alpha relative to its category benchmark, earning it a Morningstar Medalist Rating of Bronze.