JPMorgan Short Duration Bond A OGLVX

The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

The strategy's managers invest alongside shareholders, which helps it earn an Above Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in corporate bonds and debt with over 30-year maturities compared with category peers. The strategy belongs to a strong firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a favorable lineup success ratio and overall reasonable fees.

JPMorgan Short Duration Bond Fund earns an Above Average Process Pillar rating.

The most significant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 59%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. Impressive risk-adjusted performance also contributes to the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

Compared with other funds in the Short-Term Bond Morningstar Category, this fund consistently is sensitive to interest-rate changes. Opening the analysis to additional factors, the portfolio has displayed three biases over time, whether towards or away from certain fixed-income instruments. Relative to the category average, the managers have been underweight corporate bonds. Additionally, there's been a bias away from debt with longer than 30-year maturities. And finally, the fund leans meaningfully away from BBB rated bonds.

This strategy has a modest 2.1% 12-month yield, lower than its average peers' 3.1%. It also has a 3.5% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

Toby Maczka brings six years of portfolio management experience to the team. The average Morningstar Rating of the strategies they currently manage is 2.8 stars, reflecting below-average risk-adjusted performance versus category peers. Despite having a small team, the two listed managers boast 20 years of portfolio management experience. As a team, they manage two investment vehicles together, with a Silver asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha in aggregate. 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.

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.

It has been successful over the short term but weak over the long term. Over the past five years, the fund outstripped the category index, the Bloomberg Barclays U.S. Aggregate Government/ Credit 1-3 Year Index, by 15 basis points, and surpassed the category average by 15 basis points. More importantly, on a 10-year basis, this share class mirrored the index.

The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. However, this strategy hewed close to the benchmark's standard deviation.

This share class is in the middle quintile of its Morningstar Category. Its reasonable expense ratio, taken together with the fund’s People, Process, and Parent Pillars, suggests that this share class is unlikely to deliver positive alpha against its category benchmark, explaining its Morningstar Medalist Rating of Neutral.