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 Small Cap Value Fund earns an Above Average Process Pillar rating.
This strategy tends to hold smaller, more undervalued companies compared with its average peer in the Small Value Morningstar Category. Looking at additional factor exposure, this strategy tilts toward low-quality stocks or the shares of companies with more financial leverage and lower profitability. These are not defensive holdings. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. The managers have also shown an overweight risk tilt, demonstrated by high-volatility exposure. These stocks are at their best when markets are as well. High-volatility exposure contributes to stronger performance during bull markets at the cost of losing more on the downside. And compared with category peers, the strategy historically has had more exposure. Additionally, the managers do not exhibit a tilt toward momentum-oriented stocks, those currently on a winning streak. The latest portfolio has about average exposure compared with others in the equity fund universe. Momentum is based on the premise that stocks that have recently outperformed will continue to, and those that have underperformed will stay behind. 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 real estate relative to the average peer in its category by 6.2 and 5.2 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are consumer cyclical and industrials, underweight the average by 6.2 and 4.7 percentage points of assets, respectively. The portfolio is positioned across 429 holdings and assets are more dispersed than peers in the category. In particular, 9.5% of the portfolio's assets are concentrated in the top 10 fund holdings, compared to the category’s 29.5% average. And in closing, in terms of portfolio turnover, this fund trades more frequently than its average peer, potentially racking up additional expenses for investors and creating a drag on performance.