Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. JPMorgan Small Cap Growth Fund earns an Above Average Process Pillar rating.
This strategy hews closely to the market-cap and investment style of its Small Growth category peers. Examining additional factor exposure, 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 has also exhibited a tilt toward high-volatility stocks, meaning companies that have a higher historical standard deviation of returns. This factor's exposure tends to pay off most prominently when markets are hot. And compared with category peers, the strategy historically has had more exposure. Additionally, this strategy has exhibited a tilt toward liquid assets, evidenced by consistently holding companies with relatively higher trading volume. This lends the managers flexibility during bear markets to sell without adversely affecting prices. 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 healthcare and consumer cyclical relative to the average peer in its category by 4.5 and 3.1 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 5.3 percentage points of assets and basic materials similar to the average. The strategy owns 126 securities and is less top-heavy than peers. Specifically, 17.6% of the fund’s assets are concentrated within the top 10 fund holdings, compared to the category average's 25.6%. And finally, in terms of portfolio turnover, this portfolio turns over its holdings less quickly than peers, potentially leading to lower costs for investors and eliminating a drag on performance.