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JPMorgan Small Cap Growth C OSGCX

Quantitative rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 9.02  /  1.53 %
  • Total Assets 4.2 Bil
  • Adj. Expense Ratio
    1.750%
  • Expense Ratio 1.740%
  • Distribution Fee Level Low
  • Share Class Type Level Load
  • Category Small Growth
  • Investment Style Small Growth
  • Min. Initial Investment 1,000
  • Status Limited
  • TTM Yield 0.00
  • Turnover 35%
unlocked

Morningstar’s Analysis OSGCX

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 Bronze ratings to strategies they’re confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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A sound investment process and strong management team underpin JPMorgan Small Cap Growth C's Morningstar Quantitative Rating of Bronze. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the most expensive quintile among peers.

The strategy's investment process inspires confidence and earns 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 quality exposure and an overweight in volatility exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And high volatility exposure is rooted in stocks that have a higher standard deviation of returns. The longest-tenured manager's extensive experience drives the strategy's Above Average People Pillar rating. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a favorable lineup success ratio and overall affordable fees.

Process

| Above Average |

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains competitive advantage. JPMorgan Small Cap Growth Fund earns an Above Average Process Pillar rating.

This strategy does not differentiate itself from its Small Growth category peers in terms of size and style exposure. Analyzing additional factors, this strategy favors low-quality stocks. Such positions do not tend to provide much ballast for a portfolio. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. This strategy also has an overweight bias to the volatility factor, meaning investing in stocks that have a higher historical standard deviation of returns. This contributes to a high-risk, high-reward approach. And compared with category peers, the strategy historically has had more exposure. Additionally, this strategy holds highly liquid companies. More liquid assets contribute to more-flexible exit strategies without price changes and tend to be a ballast during market sell-offs. For example, if the portfolio faces successive redemptions in a short period of time, it will be less likely to suffer from a significant loss. And the portfolio has more exposure than its Morningstar Category peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in consumer cyclical and healthcare relative to the average peer in its category by 4.0 and 3.5 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are financial services and basic materials, with financial services underweighting the average portfolio by 5.1 percentage points of assets and basic materials similar to the average. The portfolio is positioned across 130 holdings and assets are more dispersed than the typical peer in the category. In the most recent disclosure, 17.6% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 26.5% average. And in closing, in terms of portfolio turnover, this fund trades less frequently than the category’s average, potentially limiting costs to investors.

People

| Above Average |

JPMorgan Small Cap Growth Fund's longest-tenured manager and seasoned portfolio managers support its Above Average People Pillar rating. Eytan M. Shapiro’s veteran status, with over 25 years of portfolio management experience, brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, demonstrating underwhelming risk-adjusted performance. Eytan M. Shapiro has an experienced listed co-manager. Together, they average 23 years of portfolio management experience. As a team, they manage two investment vehicles together, with a Silver asset-weighted average combined Morningstar Analyst and Quantitative Rating, demonstrating their potential to deliver positive alpha in aggregate.

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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This strategy’s C share class has lapped both its peers and the category benchmark. Over a 10-year period, this share class outperformed the category’s average return by 1.1 percentage points annualized. And it also exceeded the category benchmark's, Russell 2000 Growth Index's, gain by an annualized 1.5 percentage points over the same period.

The risk-adjusted performance only continues to make a case for this fund. The share class outstripped the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing 10-year period. These strong risk-adjusted results have not come with a bumpier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. However, the share class proved itself ineffective as it was unable to generate alpha, over the same 10-year period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

Price

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It is important to pay attention to fees as lower-cost investments maximize investors' returns. This share class charges a fee that positions it in its Morningstar Category's highest quintile. Despite this fee, the fund’s People, Process, and Parent Pillars suggest this share class has the potential to deliver positive alpha relative to its category benchmark, resulting in a Morningstar Quantitative Rating of Bronze.