JPMorgan Short Duration Core Plus Fund earns an Above Average Process Pillar rating.
The main driver of 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. Strong risk-adjusted performance also supports 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, such as 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 Short-Term Bond Morningstar Category, this fund takes on higher credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer 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. Relative to the average strategy in the category, the managers have been underweight AA rated bonds in recent years. In the latest month, the strategy has also relatively underweighted AA rated bonds compared with Morningstar Category peers. Additionally, there's been a bias towards debt with 20- to 30-year maturities over the past few years. Compared with category peers, the strategy had more exposure to debt with 20- to 30-year maturities in the most recent month. Finally, during the past few years, the fund leaned towards securitized debt. In this month, the strategy also leaned more towards securitized debt compared with its peers.
This strategy's 12-month yield is 3.2%, lower than its average peers' 3.7%. In addition, it has a 3.9% 30-day SEC yield (a measure similar to yield-to-maturity). While a lower yield may deliver less income, it also tends to indicate lower credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio has a lower average surveyed credit quality of BBB, compared with the typical peers' A and 8% of the fund's assets are rated non-investment-grade, compared to its peers' 2%. Strategies with more credit risk may have a higher return, but they are riskier.