JPMorgan Strategic Income Opports A JSOAX

The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

The strategy’s management team earns an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in BB rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

JPMorgan Strategic Income Opports Fd earns an Above 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 beat their respective category's median Morningstar Risk-Adjusted Return for the period. Respectable risk-adjusted performance also bolsters 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 Nontraditional Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity. Opening the analysis to additional factors, the portfolio has displayed three biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been significantly underweight BB rated bonds. Additionally, there's been a notable bias away from debt with 20- to 30-year maturities. And finally, the fund leans meaningfully toward cash.

This strategy's 12-month yield is 4.0%, lower than its average peers' 4.4%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.5%. Typically, a lower yield comes with the benefit of less credit risk. The portfolio has a higher average surveyed credit quality of BBB, compared with the typical peers' BB, and 5% of the strategy's assets are rated non-investment-grade compared with its average peers' 25%. Lower-credit-risk strategies are often able to navigate bear markets more effectively.

William H. Eigen, the longest-tenured manager on the strategy, boasts 22 years of portfolio management experience. The average Morningstar Rating of the strategies they manage is 3.8 stars, demonstrating above-average risk-adjusted performance. William H. Eigen has an experienced backdrop of support. The three listed managers boast 19 years of average portfolio management experience. At least one member of the team has invested$ 1 million or more of their own capital in the fund, which helps align 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.

It has been subpar over the short term but successful over the long term. Over the past five years, the fund lagged the category index, the ICE BofA US 3 Month Deposit OR CM Index, by 28 basis points, and outperformed the category's average return by 18 basis points. More importantly, on a 10-year basis, this share class outstripped the index by an annualized 68 basis points.

This share class levies a fee that ranks in its Morningstar Category's middle quintile. Despite this fee, the fund’s People, Process, and Parent Pillars indicate this share class can produce positive alpha relative to its category benchmark, leading to its Morningstar Medalist Rating of Bronze.