Skip to Content

JPMorgan US Equity A JUEAX

Medalist Rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 22.92  /  +0.88 %
  • Total Assets 27.6 Bil
  • Adj. Expense Ratio
    0.940%
  • Expense Ratio 0.940%
  • Distribution Fee Level Below Average
  • Share Class Type Front Load
  • Category Large Blend
  • Investment Style Large Growth
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 0.57%
  • Turnover 47%

USD | NAV as of Mar 02, 2024 | 1-Day Return as of Mar 02, 2024, 12:00 AM GMT+0

unlocked

Morningstar’s Analysis JUEAX

Medalist rating as of .

A large-cap strategy that stands out.

Our research team assigns Bronze ratings to strategies they’re confident will outperform a relevant index, or most peers, over a market cycle on a risk-adjusted basis.

A large-cap strategy that stands out.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Summary

The JPMorgan US Select Equity strategy (which includes the U.S. mutual fund and the U.K. and Luxembourg vehicles) remains a good option in a competitive category outside of a handful of share classes that levy high fees.

Beating a U.S. large-cap index is a tough task, but this offering has been up to the challenge thanks to a sensible design that addresses a pair of challenges. As the large-cap universe has become more concentrated, the decision to not own certain stocks has become more impactful. Additionally, as recent years have reaffirmed, it can be difficult to accurately predict the trajectory of macroeconomic events (or public health crises). Rather than hugging the benchmark to minimize these risks—and thereby reducing the chance to outperform net of fees—this strategy mitigates them while still maintaining a differentiated portfolio. To accomplish this, the team considers underlying factors and correlations that drive the strategy's performance relative to the benchmark. For instance, while the U.S. mutual fund's portfolio had little energy exposure for much of 2020 and 2021, manager Scott Davis held companies with correlations to the sector in Deere DE, a provider of agricultural equipment, and defense company Northrop Grumman NOC, which carried better analyst ratings than energy stocks. Both performed well during 2022, a year when the energy sector soared.

The game plan employed here can be challenging to execute, but results are encouraging. Despite a more concentrated portfolio than its previous multimanager incarnation (which ended in February 2020 for the U.S. mutual fund), the performance profile (as measured by tracking error) has remained relatively similar, while alpha has increased—evidence of the investment process' efficacy.

J.P. Morgan's talented team of 20-plus analysts has delivered for this offering and others. That group contains many tenured analysts who’ve been at the firm for a decade or more, along with a mix of newer analysts who've filled in for the occasional departure or reassignment. The firm tends to hire strong replacements when openings emerge. Davis and comanager Shilpee Raina work closely with the team to pick stocks with a combination of high risk-adjusted upside, portfolio fit, and targeted risk exposure.

Overall, while operating in a highly efficient market segment will always be a steep hill to scale, this offering has a better shot than most to deliver.

Rated on Published on

Careful portfolio construction combined with deep research and collaboration merit an Above Average Process rating.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Process

Above Average

Despite generally investing in 50-60 stocks, this portfolio hasn't behaved all that differently from its S&P 500 benchmark, and that is due to manager Scott Davis' work alongside J.P. Morgan's central team of sector analysts. Analysts rank stocks in their coverage universe, but Davis doesn't simply pick the ones on top. He challenges analysts on their picks, pinning their ideas against others that possess similar business characteristics, all with the goal of building a portfolio that will substantially assume the same factor risks as the benchmark. The portfolio's sector weightings tend to differ from those of the benchmark as Davis considers the correlations between stocks more than their official labels.

The result is a concentrated portfolio that behaves like a more diversified one, with the variance explained by idiosyncratic factors rather than sector or style bets. Davis utilizes a quantitative model to backtest hypothetical portfolios, but much of his work is focused on forward-looking risks that cannot be captured by historical data.

Davis is fairly agnostic from a style perspective, though he admits he has a slight preference for stocks with healthier financials in market-leading positions. Still, the portfolio has tended to fall in the blend section of the Morningstar Style Box, reflecting a broad approach.

This portfolio finds a balance between differentiation and keeping a lid on active risk. The U.S. mutual fund held 51 stocks in September 2023, significantly less than the 140-180 it had previously under three independently managed sleeves. However, manager Scott Davis' desire to let stock selection drive results leads to only moderate sector bets relative to its S&P 500 benchmark. Davis also considers factor exposure when building the portfolio. For instance, he increased the portfolio's stake in financials companies toward the end of 2020 to bolster its exposure to cheaper, more cyclical stocks to help offset its lack of exposure to the energy sector.

The strategy also holds a handful of stocks not in its benchmark, such as global semiconductor firms NXP Semiconductors NXPI and ASML Holdings ASML. Davis feels justified in owning these companies as a significant portion of their revenues is derived from the United States. The vast majority of the strategy's assets are invested in U.S.-domiciled firms.

The portfolio has historically leaned a bit more toward a growth style than its benchmark, but it has only been a slight bias. The portfolio still tends to fall in the blend section of the Morningstar Style Box.

Given the strategy's asset base of over $50 billion, it tends to avoid smaller mid-caps due to liquidity reasons but will occasionally invest in the larger ones.

Rated on Published on

Deep analyst resources and a capable lead manager warrant an Above Average People rating.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

People

Above Average

This strategy continues to rely heavily on J.P. Morgan’s core research team, but it is now led exclusively by Scott Davis, who oversaw the strongest-performing sleeve of this formerly multimanaged offering. Davis became a named manager in August 2014, inheriting a 10% slice of the strategy but quickly saw his share grow, most notably after manager Thomas Luddy stepped down at the end of 2017. Before being awarded full control here in 2020 (and in 2019 for the European vehicles), Davis managed 65% of the fund alongside comanager Susan Bao's 10% and an analyst-directed sleeve representing 25%.

Davis continues to leverage the ideas of J.P. Morgan’s core research team, which consists of 20-plus analysts with extensive industry experience. That group tends to see an analyst or two leave most years—sometimes to a different team within the firm—but capable replacements are consistently found. Analysts now have a portion of their compensation tied to this fund's performance, which helps align incentives.

Davis receives additional support from Shilpee Raina, a former analyst on JPMorgan Equity Income HLIEX who became a named comanager in November 2021. Raina has a generalist background but most recently specialized in consumer stocks.

Rated on Published on

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

Associate Director Emory Zink

Emory Zink

Associate Director

Parent

Above Average

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.

Rated on Published on

Since manager Scott Davis’ August 2014 debut through October 2023, the U.S. mutual fund's institutional share class gained an annualized 11.1%, which beat the Russell 1000 category benchmark's 10.3%.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Performance

Relative to the large-blend Morningstar Category peer group, the fund landed ahead of 96% of rivals over the trailing 10-year period ended October 2023. While these periods include contributions from other manager sleeves, Davis' stand-alone track record from a similar separately managed account performed better than the overall fund. The fund has been a touch more volatile, but not enough to spoil its advantage. Its Sharpe ratio, a measure of risk-adjusted return, has edged the benchmark's over Davis' tenure.

Stock selection, as opposed to sector or industry allocation, has been the key driver of the fund's excess returns. Top picks over Davis' tenure include industrial REIT Prologis PLD, power management company Eaton ETN, and lithography leader ASML Holding ASML.

While performance in 2022 was below its typical standard, the fund has bounced back through the first 10 months of 2023, gaining 11.4% versus its average rival's 7.3%. Tech picks stood out the most, including overweightings in Nvidia NVDA and Microsoft MSFT, though stakes in Uber Technologies UBER and Eaton were larger contributors.

Published on

It’s critical to evaluate expenses, as they come directly out of returns.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Price

Based on our assessment of the fund’s People, Process, and Parent Pillars in the context of these expenses, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Medalist Rating of Bronze.

Published on

Portfolio Holdings JUEAX

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 39.7
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

Microsoft Corp

9.69 2.5 Bil
Technology

Apple Inc

4.72 1.2 Bil
Technology

Amazon.com Inc

4.64 1.2 Bil
Consumer Cyclical

NVIDIA Corp

3.98 1.0 Bil
Technology

Alphabet Inc Class A

3.39 875.3 Mil
Communication Services

Meta Platforms Inc Class A

2.92 754.2 Mil
Communication Services

UnitedHealth Group Inc

2.89 745.1 Mil
Healthcare

AbbVie Inc

2.63 679.1 Mil
Healthcare

McDonald's Corp

2.47 636.7 Mil
Consumer Cyclical

Deere & Co

2.38 614.4 Mil
Industrials