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JPMorgan Tax Free Bond A PMBAX

Quantitative rating as of
NAV / 1-Day Return
10.85  /  0.09 %
Total Assets
552.3 Mil
Adj. Expense Ratio
Expense Ratio
0.670%
Distribution Fee Level
Low
Share Class Type
Front Load
Category
Muni National Long
Credit Quality / Interest Rate Sensitivity
Medium / Extensive
Min. Initial Investment
1,000
Status
Open
TTM Yield
2.81%
Effective Duration
9.05 years
unlocked

Morningstar’s Analysis PMBAX

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 Tax Free Bond A boasts strong Process and People Pillar ratings, but other weaknesses hold this strategy's Morningstar Quantitative Rating at Neutral. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

The strategy's sensible investment philosophy merits an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an underweight position in A rated bonds and an overweight in cash compared with category peers. The longest-tenured manager's extensive experience drives the strategy's Above Average People Pillar rating. The strategy is part of a first-rate parent, as shown by a competitive lineup success ratio and overall reasonable fees. These attributes support its Above Average Parent Pillar rating.

Process

| Above Average |

Morningstar's evaluation of this fund's process aims to determine whether it has been applied consistently over time, as demonstrated by the portfolio's composition, its suitability for different types of investors, and expectations for performance in different market conditions, assuming the process is adhered to. JPMorgan Tax Free Bond Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Muni National Long Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity. 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 A rated bonds compared to peers. Additionally, the fund has exhibited a notable sector bias toward cash. And finally, the fund leans away from debt with 20- to 30-year maturities.

This strategy's 12-month yield is 2.9%, higher than its average peer's 2.8%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.0%. Higher yields tend to indicate higher credit risk. The portfolio favors lower-quality credit with an average of BBB, compared with the typical peer's A and its non-investment grade stake is 4% of assets, compared to its peers' 1%. Higher credit risk strategies tend to pay off most when markets are hot.

People

| Above Average |

JPMorgan Tax Free Bond Fund's longest-tenured manager and experienced portfolio managers underpins the strategy's Above Average People Pillar rating. Richard D. Taormina, the longest-tenured manager on the strategy, boasts over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.5 stars, demonstrating underwhelming risk-adjusted performance. Richard D. Taormina has an experienced listed co-manager. Together, they average 22 years of portfolio management experience.

Parent

| Above Average |

J.P. Morgan Asset Management’s strong investment culture, which shows through its long-tenured, well-aligned portfolio managers and deep analytical resources, supports a renewed Above Average Parent rating.

Across asset classes and regions, the firm's diverse lineup features many Morningstar Medalists, such as its highly regarded U.S. equity income strategy that’s available globally. There's been some turnover in the multi-asset team recently, but it remains deeply resourced and experienced. Manager retention and tenure rates, and degree of alignment for U.S. mutual funds compare favorably among the competition. Managers' compensation emphasizes fund ownership over stock ownership, which is distinctive for a public company.

The firm continues to streamline its lineup and integrate its resources further. For instance, in late 2019, the multi-asset solutions division combined with the passive capabilities. The firm hasn’t launched trendy offerings as it’s mostly expanded its passive business lately, but acquisition-related redundancies and more hazardous launches in the past weigh on its success ratio, which measures the percentage of funds that have both survived and outperformed peers. Fees are regularly reviewed downward globally; they're relatively cheaper in the U.S. than abroad. Also, the firm is building its ESG capabilities and supports distinctive initiatives on diversity.

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 Long category. Over the past 10-year period, this share class lagged its average peer by an annualized 17 basis points. It was also not able to outpace the category benchmark, Bloomberg Barclays Municipal Bond Index, where it trailed by an annualized 60 basis points over the same period.

Even when adjusting for risk, the fund is not favorable. The share class trailed the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. But notably, these subpar risk-adjusted results have not come with a rockier ride for investors. This strategy took on similar risk as the benchmark, as measured by 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 lands in the middle quintile of its Morningstar Category. Its modest fee, considered jointly with the fund’s People, Process, and Parent Pillars, indicates that this share class could struggle to deliver positive alpha against its category benchmark, leading to its Morningstar Quantitative Rating of Neutral.