JPMorgan Floating Rate Income I JPHSX

The portfolio maintains a cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in corporate bonds and an underweight in junk bonds compared with category peers. The management team's large personal investment in the strategy helps it earn an Above Average People Pillar rating, following a recent upgrade from Average. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a high lineup success ratio and overall affordable fees.

JPMorgan Floating Rate Income Fund earns an Average Process Pillar rating.

The leading factor in the rating is the parent firm's five-year risk-adjusted success ratio of 59%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also supports the rating. Lastly, the process is limited by the fund's unremarkable long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

Compared with other funds in the Bank Loan Morningstar Category, this fund consistently is sensitive to interest-rate changes. Opening the analysis to additional factors, the portfolio has displayed three biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have beenan overweight corporate bonds. Additionally, there's been a bias away from junk bonds. And finally, the fund leans toward debt with three- to five-year maturities.

This strategy's 12-month yield is 7.4%, higher than its average peer's 7.3%. It also has an 8.3% 30-day SEC yield (a measure similar to yield-to-maturity). While a higher yield may deliver more income, it also tends to indicate higher credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been higher than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated B.

The team is backed by James P. Shanahan, the longest-tenured manager on the strategy, who provides over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.0 stars, indicating that their risk-adjusted returns have been in line with the category average. James P. Shanahan has an experienced backdrop of support. The three listed managers boast 15 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.

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.

Over the past 10-year period, this share class lagged its average peer by an annualized 14 basis points. It also trailed the category benchmark, S&P/ LSTA Leveraged Loan Index, by an annualized 1.2 percentage points over the same period.

Even when adjusting for risk, the fund is not favorable. The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. But notably, these subpar risk-adjusted results have not come with more volatility than the benchmark, as measured by standard deviation.

This share class levies a fee that places it in its Morningstar Category's second-cheapest quintile. Even with this fee, the fund’s People, Process, and Parent Pillars indicate this share class is unlikely to deliver positive alpha relative to its category benchmark, leading to its Morningstar Medalist Rating of Neutral.