JPMorgan International Equity R6 JNEMX

JPMorgan International Equity R6’s strong process and parent firm are the foundation for this strategy's Morningstar Quantitative Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the least expensive fee quintile among peers.

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 overweight position in quality exposure and an underweight in yield exposure compared with category peers. High quality exposure is attributed to stocks with low financial leverage and strong returns on equity. And a low yield exposure is rooted in holding fewer stocks with high dividend or buyback yields -- instead, typically holding stocks in an early stage of development. The strategy is part of a first-rate parent, as shown by a favorable lineup success ratio and overall low fees. These attributes support its Above Average Parent Pillar rating. Finally, the strategy's longest-tenured manager is experienced, but still gets an Average People Pillar rating.

Morningstar's style-agnostic investment process evaluation looks for strategies with a philosophy distinctive enough to generate standout results in the future. JPMorgan International Equity Fund earns an Above Average Process Pillar rating.

This strategy leans toward larger, more growth-oriented companies compared with its average peer in the Foreign Large Blend Morningstar Category. Examining additional factor exposure, this strategy favors high-quality stocks, which can improve downside risk protection because it entails holding consistently profitable, growing companies with solid balance sheets. The strategy is also historically more exposed compared with Morningstar Category peers. This strategy has not displayed a preference for or against yield. The most recent portfolio has about-average exposure compared with the typical equity fund. Investors usually seek higher-yielding stocks for income, but the shares also tend to be less volatile than non-dividend payers, unless they cut their payouts. But when compared with category peers, the strategy historically has had less exposure. Additionally, the managers do not tilt toward or away from liquidity risk, the current portfolio is about as liquid as others in the equity strategies universe. Although there is some evidence to indicate investors earn a premium for bearing this risk, in the case of a bear market, less-liquid assets are more difficult to sell without adversely affecting prices. 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 by 3.3 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 consumer cyclical and real estate, with consumer cyclical underweighting the average portfolio by 3.4 percentage points of assets and real estate similar to the average. The portfolio is positioned across 76 holdings and is rather concentrated at the top, relatively. In particular, 28.7% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 14.7%. And finally, in terms of portfolio turnover, this fund trades less frequently than the category’s average, potentially limiting costs to investors.

The team at JPMorgan International Equity Fund has benefited from its longest-tenured manager and minimal team turnover, but it still does not stand out as one of the industry's best, warranting an Average People Pillar rating. Thomas Murray, the longest-tenured manager on the strategy, boasts over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.7 stars, demonstrating disappointing risk-adjusted performance. The team boasts an experienced corps of listed portfolio managers, with three others supporting Thomas Murray. Together they average 21 years of portfolio management experience. As a team, they manage two investment vehicles together, with a Bronze asset-weighted average combined Morningstar Analyst and Quantitative Rating, demonstrating their 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 three years.

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 outstripped both its peers and the category benchmark. Over a 10-year period, this share class outpaced the category's average return by 27 basis points annualized. And it also outperformed the category index's, MSCI ACWI ex USA Index's, gain by an annualized 38 basis points over the same period.

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 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. 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.

It is important for investors to be on guard for fees, as they are essentially negative alpha. This share class is within the cheapest quintile of its Morningstar Category. Its competitive expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, indicates that this share class can deliver positive alpha against its category benchmark, explaining its Morningstar Quantitative Rating of Bronze.