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JPMorgan Unconstrained Debt R5 JSIRX

Quantitative rating as of
NAV / 1-Day Return
9.39  /  0.11 %
Total Assets
988.8 Mil
Adj. Expense Ratio
Expense Ratio
0.600%
Distribution Fee Level
Below Average
Share Class Type
Retirement, Large
Category
Nontraditional Bond
Credit Quality / Interest Rate Sensitivity
Medium / Limited
Min. Initial Investment
0
Status
Open
TTM Yield
3.21%
Effective Duration
0.39 years
unlocked

Morningstar’s Analysis JSIRX

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 Neutral ratings to strategies they’re not confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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Strength in JPMorgan Unconstrained Debt R5's Process Pillaris partially offset by an Average People Pillar rating, leading to a Morningstar Quantitative Rating of Neutral. The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.

The strategy benefits from its experienced portfolio management team. This is a positive driver for the strategy's Average People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. The portfolio has overweighted debt with five- to seven-year maturities and has an underweight in cash compared with category peers. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a high lineup success ratio and overall reasonable fees.

Process

| Above Average |

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

Compared with other funds in the Nontraditional Bond 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 displayed an overweight position on debt, with five- to seven-year maturities relative to the average strategy in the category. Additionally, the managers have exhibited a sector bias away from cash. And finally, the fund does not consistently lean toward or away from AA rated bonds, but the current portfolio is overweight its peers.

This strategy's 12-month yield is 3.3%, lower than its average peer's 3.5%. In addition, it has a 4.2% 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 BB.

People

| Average |

The team at JPMorgan Unconstrained Debt Fund has the benefit of an experienced corps of managers and managers' sizable personal investments, but is still relatively unexceptional, earning the strategy an Average People Pillar rating. The team is backed by Robert Michele, the longest-tenured manager on the strategy, who brings over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.7 stars, demonstrating encouraging risk-adjusted performance. Robert Michele is supported by an experienced team, being able to draw on four additional listed managers, who average over 30 years of portfolio management experience. As a team, they manage nine investment vehicles together, with an asset-weighted average Neutral combined Morningstar Analyst and Quantitative Rating. This means, in aggregate, the team falls short and will struggle to produce positive alpha. With at least one manager investing $1 million or more in this offering, investors can have some assurance that the team's interests are aligned with theirs.

Parent

| Above Average |

J.P. Morgan Asset Management’s strong investment culture, which shows through its long-tenured, well-aligned portfolio managers and deep analytical resources, supports a renewed Above Average Parent rating.

Across asset classes and regions, the firm's diverse lineup features many Morningstar Medalists, such as its highly regarded U.S. equity income strategy that’s available globally. There's been some turnover in the multi-asset team recently, but it remains deeply resourced and experienced. Manager retention and tenure rates, and degree of alignment for U.S. mutual funds compare favorably among the competition. Managers' compensation emphasizes fund ownership over stock ownership, which is distinctive for a public company.

The firm continues to streamline its lineup and integrate its resources further. For instance, in late 2019, the multi-asset solutions division combined with the passive capabilities. The firm hasn’t launched trendy offerings as it’s mostly expanded its passive business lately, but acquisition-related redundancies and more hazardous launches in the past weigh on its success ratio, which measures the percentage of funds that have both survived and outperformed peers. Fees are regularly reviewed downward globally; they're relatively cheaper in the U.S. than abroad. Also, the firm is building its ESG capabilities and supports distinctive initiatives on diversity.

Performance

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This strategy’s Retirement share class has outstripped both its peers and the category benchmark. This share class led its average peer by an annualized excess return of 74 basis points over a 10-year period. And it also exceeded the category benchmark's, ICE BofA US 3 Month Deposit OR CM Index's, gain by an annualized 1.5 percentage points over the same period.

When adjusting for risk, the fund is not as favorable. The share class trailed the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. The strategy also took on elevated risk, contributing to the bad outcome for investors. Specifically, the fund had a higher standard deviation, 3.1%, compared with the benchmark, 0.3%. 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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It is critical to evaluate expenses, as they come directly out of returns. This share class imposes a fee that places it in its Morningstar Category's cheapest quintile. Despite 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 Quantitative Rating of Neutral.