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JPMorgan High Yield Municipal C JTICX

Quantitative rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 9.91  /  0.30 %
  • Total Assets 325.3 Mil
  • Adj. Expense Ratio
    1.150%
  • Expense Ratio 1.150%
  • Distribution Fee Level Low
  • Share Class Type Level Load
  • Category High Yield Muni
  • Credit Quality / Interest Rate Sensitivity
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 3.16%
  • Effective Duration 9.07 years
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Morningstar’s Analysis JTICX

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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JPMorgan High Yield Municipal C boasts strong Process and People Pillar ratings, but other weaknesses hold this strategy's Morningstar Quantitative Rating at Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-highest quintile among peers.

The strategy's effective investment philosophy supports 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 B rated bonds and an overweight in debt with 10- to 15-year maturities compared with category peers. The management team's considerable industry experience earns it an Above Average People Pillar rating. 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 low 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 High Yield Municipal Fund earns an Above Average Process Pillar rating.

Compared with other funds in the High Yield Muni Morningstar Category, this fund's cash position and interest-rate sensitivity are historically in line with peers.

This strategy rides below the mark with a 3.2% 12-month yield, compared with its category's average 3.7% yield. It also has a 4.2% 30-day SEC yield (a measure similar to yield-to-maturity). A lower yield tends to indicate lower 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

| Above Average |

JPMorgan High Yield Municipal Fund benefits from an experienced corps of managers and its longest-tenured manager, warranting an Above Average People Pillar rating. Richard D. Taormina, the longest-tenured manager on the strategy, boasts over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.5 stars, demonstrating underwhelming risk-adjusted performance. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of over 25 years of portfolio management experience.

Parent

| Above Average |

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various cohorts globally and a diverse set of 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.

Performance

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Performance-wise, this strategy’s C share class, with returns reported in US Dollar, has demonstrated it is weak over a full market cycle, with inferior returns compared with peers and when adjusted for risk. The share class lagged the category index, Bloomberg Barclays 65% High Grade / 35% High Yield Bond Index, with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. But notably, these subpar risk-adjusted results have not come with a rockier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. Finally, the share class proved itself ineffective as it was unable to generate alpha, over the same period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

The fund continues to have a disappointing track record viewed through the lens of long-term absolute returns. The share class underperformed the category index by an annualized 1.6 percentage points over the past 10 years. The picture is also bleak when comparing it with peers. The fund trailed the category average by an annualized 77 basis points over the same 10-year period.

Price

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It is important to be aware of fees, as lower-cost investments maximize investors' returns. This share class lands in the second-costliest quintile of its Morningstar Category. Its steep expense ratio, taken together with the fund’s People, Process, and Parent Pillars, indicates that this share class could struggle to deliver positive alpha compared with its category benchmark, leading to its Morningstar Quantitative Rating of Neutral.