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JPMorgan Floating Rate Income C JPHCX

Quantitative rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 8.36  /  0.12 %
  • Total Assets 285.9 Mil
  • Adj. Expense Ratio
  • Expense Ratio 1.500%
  • Distribution Fee Level Low
  • Share Class Type Level Load
  • Category Bank Loan
  • Credit Quality / Interest Rate Sensitivity Low / Limited
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 4.97%
  • Effective Duration 0.39 years
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Morningstar’s Analysis JPHCX

Quantitative rating as of .

The Morningstar Quantitative Rating for funds is analogous to the rating our analyst might assign to the fund if they covered it.

Our analysts assign Negative ratings to strategies they’re confident will underperform a relevant index, or most peers, over a market cycle.

Summary

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JPMorgan Floating Rate Income C's Average Process and People Pillar ratings aren't enough to prevent other weaknesses from sending this strategy to a Morningstar Quantitative Rating of Negative. 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 earns an Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in corporate bonds and BB rated bonds compared with category peers. The management team invests alongside the strategy's shareholders, which helps it earn an Average People Pillar rating. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a competitive lineup success ratio and overall affordable fees.

Process

| Average |

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 Floating Rate Income Fund earns an Average Process Pillar rating.

Compared with other funds in the Bank Loan 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 demonstrated an overweight position on corporate bonds. Additionally, there's been a notable overweight bias toward BB rated bonds. And finally, the fund leans meaningfully away from debt with seven- to 10-year maturities.

This strategy rides below the mark with a 4.6% 12-month yield, compared with its category's average 5.3% yield. It also has a 7.5% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk. Yet that's not the case here. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

People

| Average |

The team managing JPMorgan Floating Rate Income Fund stands out with its managers' personal investments. Otherwise, it is viewed as standard in the industry, with average team turnover, warranting an Average People Pillar rating. James P. Shanahan, 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 3.2 stars, demonstrating average risk-adjusted performance. James P. Shanahan has an experienced backdrop of support. The three listed managers boast 14 years of average portfolio management experience. The highest personal investment in the fund by any of its managers is between $500,000 and $1 million. That's on the low side--it would need to be more than $1 million for us to see the investment as sufficient to promote the strong alignment of their interests with the strategy's investors. The fund has had about average portfolio manager turnover compared to other teams. Long-term stability strengthens a team's rating as it tends to support positive results. The most recent documented departure was within the past two years.

Parent

| Above Average |

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.

Performance

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Trailing both category peers and the index, this strategy’s C share class has had a weak track record in the Bank Loan category. Over the past 10-year period, this share class lagged its average peer by an annualized 88 basis points. It also trailed the category benchmark, S&P/LSTA Leveraged Loan Index, by an annualized 1.9 percentage points over the same period.

Even when adjusting for risk, the fund is not favorable. The share class failed to beat the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. But notably, these subpar 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. However, 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.

Price

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By minimizing expenses, investors can maximize their expected returns. This share class lands in the costliest quintile of its Morningstar Category. Its pricey fee, considered jointly with the fund’s People, Process, and Parent Pillars, results in a judgment that this share class could produce materially negative alpha compared with its category benchmark, leading to its Morningstar Quantitative Rating of Negative.

Portfolio Holdings JPHCX

  • Current Portfolio Date Jan 31, 2023
  • Equity Holdings 7
  • Bond Holdings 209
  • Other Holdings 3
  • % Assets in Top 10 Holdings 11.7
Top 10 Holdings
% Portfolio Weight
Market Value USD
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