JPMorgan High Yield’s experienced team, considerable resources, straightforward process, and improved People rating earn a Morningstar Medalist Rating of Neutral for all share classes.
The integration of the firm’s two legacy high-yield teams in September 2019 has emerged as a formidable, cohesive, and stable unit after a transition period marked by higher personnel turnover. Rob Cook, with over three decades of experience, assumed leadership of the firm’s global high-yield platform and was named portfolio manager on the fund. He works alongside seasoned comanagers Jim Shanahan (37 years), Thomas Hauser (30 years), and Jeffrey Lovell (28 years) to collaborate on portfolio decisions. As one of the deeper credit teams in the industry, its 17 dedicated high-yield research analysts bring over 18 years of average industry experience and feature a good balance of newer and veteran researchers.
Effective fundamental credit analysis and collaboration among portfolio managers, analysts, and traders is key here. Bottom-up security selection drives the process, and each sector-focused researcher dives deeply into their respective issuers to build the portfolio. Regular and impromptu meetings ensure ample inputs to discuss broad fund positioning, relative value opportunities, new issues, and individual credits. The managers leverage this information alongside firm-generated risk models around liquidity and sector diversification when positioning the fund relative to its ICE BofA U.S. High Yield Constrained Index. While historical industry weights closely reflect the benchmark, over the past four years since this team was combined, Cook is more willing to feature larger stakes in higher-conviction ideas and deviate more from the benchmark’s duration. The ability to invest in senior secured bank loans gives this team added flexibility.
Compared with its benchmark and peers, long-term returns are only middling. Over the trailing 10 years, the fund’s R6 shares’ 3.3% annualized return through May 2023 was slightly worse than its distinct high-yield bond Morningstar Category median peer’s 3.4% and ranked similarly on a volatility-adjusted basis, as measured by Sharpe ratio. While the team looks to improve results with more concentrated portfolio stakes in high-conviction issuers, performance since this team took over in September 2019 doesn’t stand out, in large part because of a challenging 2020.