Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. JPMorgan Small Cap Value Fund earns an Above Average Process Pillar rating.
This strategy leans toward smaller, more undervalued companies compared with its average peer in the Small Value Morningstar Category. Looking at additional factor exposure, this strategy favors low-quality stocks. Such positions do not tend to provide much ballast for a portfolio. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. This strategy also has an overweight bias to the volatility factor, meaning investing in stocks that have a higher historical standard deviation of returns. This contributes to a high-risk, high-reward approach. And compared with category peers, the strategy historically has had more exposure. Additionally, the managers do not exhibit a tilt toward momentum-oriented stocks, those currently on a winning streak. The latest portfolio has about average exposure compared with others in the equity fund universe. Momentum is based on the premise that stocks that have recently outperformed will continue to, and those that have underperformed will stay behind. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.
The portfolio is overweight in healthcare and real estate relative to the average peer in its category by 6.2 and 5.2 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are consumer cyclical and industrials, underweight the average by 6.2 and 4.7 percentage points of assets, respectively. The strategy owns 429 securities and is less top-heavy than peers. Specifically, 9.5% of the fund’s assets are concentrated within the top 10 fund holdings, as opposed to the category’s 29.5% average. And in closing, in terms of portfolio turnover, this portfolio trades more frequently than the average peer in its category, which may result in higher trading costs for investors and cause a drag on performance.