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JPMorgan Short-Interm Muncpl Bd A OSTAX

Quantitative rating as of
  • NAV / 1-Day Return 10.22  /  0.10 %
  • Total Assets 1.1 Bil
  • Adj. Expense Ratio
  • Expense Ratio 0.700%
  • Distribution Fee Level Above Average
  • Share Class Type Front Load
  • Category Muni National Short
  • Credit Quality / Interest Rate Sensitivity Medium / Limited
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 1.33%
  • Effective Duration 3.30 years
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Morningstar’s Analysis OSTAX

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 Neutral ratings to strategies they’re not confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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JPMorgan Short-Interm Muncpl Bd A boasts strong Process and People Pillar ratings, but other weaknesses hold this strategy's Morningstar Quantitative Rating at Neutral. Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-highest quintile among peers.

The strategy's effective investment philosophy supports an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in AAA rated bonds and debt with 20- to 30-year maturities compared with category peers. The strategy's management team has a high retention rate, which helps continuity and earns it an Above Average People Pillar rating. The strategy has a solid parent that earns an Above Average Parent Pillar rating. This firm has had a competitive lineup success ratio and overall affordable fees.

Process

| Above Average |

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. JPMorgan Short-Intermediate Muncpl Bd Fd earns an Above Average Process Pillar rating.

Compared with other funds in the Muni National Short Morningstar Category, this fund consistently is sensitive to interest-rate changes. Opening the analysis to additional factors, the portfolio, over time, has displayed three biases whether toward or away from certain fixed-income instruments. First, managers have shown a consistent underweight position on AAA rated bonds compared to peers. Additionally, there's been a bias away from debt with 20- to 30-year maturities. And finally, the fund does not consistently lean toward or away from corporate bonds, but the current portfolio is underweight its peers.

This strategy rises above the mark with a 1.3% 12-month yield, compared with its category's average 1.0% yield. It also has a 2.5% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, higher yields come at the cost of higher credit risk. Yet that's not the case here. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

People

| Above Average |

Despite managers' lack of personal investments, JPMorgan Short-Intermediate Muncpl Bd Fd benefits from limited portfolio manager turnover. As the latter outweighs the former, the strategy earns an Above Average People Pillar rating. Kevin M. Ellis, the longest-tenured manager on the strategy, boasts 18 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, demonstrating underwhelming risk-adjusted performance. Kevin M. Ellis has an experienced listed co-manager. Together, they average 17 years of portfolio management experience. The management team has provided the fund with commendable continuity. There have been no documented departures within the past 10 years. None of the portfolio managers here invests in this fund. This hurts the rating because it suggests the team has little confidence the fund can deliver for investors, and that the alignment of managers' interests with those of the strategy's investors could be far better than it is.

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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Trailing both category peers and the index, this strategy’s A share class has had a weak track record in the Muni National Short category. Specifically, over the past 10-year period, this share class trailed its category's average return by an annualized 23 basis points. It was also not able to outpace the category benchmark, Bloomberg Barclays Municipal 3 Year 2-4 Year Maturity Bond Index, where it trailed by an annualized 54 basis points over the same period. Although one-year performance does not factor heavily in the overall rating, it is worth mentioning that this share class lost 5.6%, a sizable 2.8-percentage-point loss over its average peer, placing it within the bottom 10% of its category group.

When risk is properly accounted for, the strategy is not any more compelling. 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 stayed in line with the benchmark's standard deviation. Finally, 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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By minimizing expenses, investors can maximize their expected returns. This share class sits in the second-costliest quintile of its Morningstar Category. Its pricey fee, taken together with the fund’s People, Process, and Parent Pillars, indicates that this share class does not offer investors a good chance to capture positive alpha against its category benchmark, leading to its Morningstar Quantitative Rating of Neutral.