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JPMorgan Strategic Income Opports I JSOSX

Quantitative rating as of
NAV / 1-Day Return
11.36  /  0.00
Total Assets
9.2 Bil
Adj. Expense Ratio
Expense Ratio
0.750%
Distribution Fee Level
Average
Share Class Type
Institutional
Category
Nontraditional Bond
Credit Quality / Interest Rate Sensitivity
High / Limited
Min. Initial Investment
1,000,000
Status
Open
TTM Yield
0.83%
Effective Duration
−0.11 years
unlocked

Morningstar’s Analysis JSOSX

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 Bronze ratings to strategies they’re confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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A strong management team and sound investment process underpin JPMorgan Strategic Income Opports I's Morningstar Quantitative Rating of Bronze. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy's managers invest alongside shareholders, which helps it earn an Above Average People Pillar rating. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. The portfolio has been significantly underweight BB rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a favorable lineup success ratio and overall affordable fees.

Process

| Above Average |

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. JPMorgan Strategic Income Opports Fd 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, managers have shown a consistent large underweight position on BB rated bonds compared to peers. 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 1.0%, lower than its average peer's 3.5%. It also has a 2.7% 30-day SEC yield (a measure similar to yield-to-maturity). A lower yield tends to indicate lower credit risk. The portfolio has a higher average surveyed credit quality, BBB, compared with the typical peer's BB and 6% of the strategy's assets are rated non-investment grade compared with its average peers' 26%. Lower-credit-risk strategies are often able to navigate bear markets more effectively.

People

| Above Average |

JPMorgan Strategic Income Opports Fd's sizable personal investments from managers and strong longest-tenured manager support its Above Average People Pillar rating. The team is backed by William H. Eigen, the longest-tenured manager on the strategy, who provides 21 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 4.3 stars, demonstrating impressive risk-adjusted performance. William H. Eigen has an experienced backdrop of support. The three listed managers boast 18 years of average portfolio management experience. 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 Institutional share class has held up nicely, outlasting both its peers and the category benchmark. Over a 10-year period, this share class outpaced the category's average return by 96 basis points annualized. And it was also ahead of the category index’s, ICE BofA US 3 Month Deposit OR CM Index's, gain by 1.2 percentage points over the same period. Although the overall rating does not hinge on one-year performance, its impressive 0.4% loss is worth mentioning, a 7.6-percentage-point lead over its average peer, placing it within the top 10% of its category.

When risk is properly accounted for, the strategy is less compelling. The share class trailed the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. Unfortunately, the fund took on higher risk, as measured by the variance of returns. Specifically, the strategy had a higher standard deviation, 2.2%, versus 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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Returns vary from period to period, but expenses are always subtracted. It is good practice to weigh them heavily in any investment evaluation. This share class is within the second-cheapest quintile of its Morningstar Category. Its competitive expense ratio, considered jointly with the fund’s People, Process, and Parent Pillars, indicates that this share class is well-positioned to generate positive alpha compared with its category benchmark, leading to its Morningstar Quantitative Rating of Bronze.