JPMorgan Value Advantage’s time-tested manager adds enough value to earn cheaper share classes a Morningstar Analyst Rating of Bronze, but more expensive ones are rated Neutral.
Lead manager Jonathan Simon’s more than four decades of experience loom large for this flexible offering. Simon combines his extensive work with mid-caps on Silver-rated JPMorgan Mid Cap Value FLMVX with large-cap insights from JPMorgan’s core analyst team and a dedicated small/mid-cap research group. Results have been strong over his nearly 18 years managing this strategy, though performance has been less impressive since it increased its holdings in more-liquid large-cap stocks roughly a decade ago to accommodate a bulkier asset base.
Comanager Graham Spence plays a key role as Simon’s right-hand man. He first joined as a dedicated resource in 2013, covering niche areas of the market while offering analytical support as a generalist. Spence might be an eventual successor for Simon, who is now in his early 60s, though Simon hasn’t indicated that his retirement is imminent.
The market’s recent pivot back in favor of value investing has given Simon extra drive to keep managing the strategy. After a meager 1.8% loss in 2020, the institutional shares gained 28.6% in 2021, and despite a 13.6% drop through the first nine months of 2022, they’ve held up better than the large-value Morningstar Category average and Russell 3000 Value Index benchmark. Simon’s ever-present bias toward financials and an uncharacteristic overweighting in energy stocks boosted performance, though the quality of stock selection was the bigger driver of results. Bank, real estate, and communication services picks were particularly strong.
While the portfolio held up well in 2022’s down market, it hasn’t always been as defensive, as Simon takes greater liberty here than on his other charges to buy cheap stocks with weaker financials. Missteps in struggling companies hurt performance in years past, though Simon hasn’t changed his style.
Even though execution can be hit-or-miss, this strategy has a shot to outperform thanks to its veteran leader.