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JPMorgan Small Cap Value I PSOPX

Medalist Rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 26.73  /  +0.22 %
  • Total Assets 1.4 Bil
  • Adj. Expense Ratio
    0.940%
  • Expense Ratio 0.940%
  • Distribution Fee Level Average
  • Share Class Type Institutional
  • Category Small Value
  • Investment Style Small Value
  • Min. Initial Investment 1.0 Mil
  • Status Open
  • TTM Yield 1.49%
  • Turnover 79%

USD | NAV as of Feb 22, 2024 | 1-Day Return as of Feb 22, 2024, 11:53 PM GMT+0

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Morningstar’s Analysis PSOPX

Medalist rating as of .

JPMorgan Small Cap Value I’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver.

Our research team assigns Silver ratings to strategies that they have a high conviction will outperform the relevant index, or most peers, over a market cycle on a risk-adjusted basis.

JPMorgan Small Cap Value I’s management team is rated Average, but a solid investment process still helps this strategy retain its Morningstar Medalist Rating of Silver.

null Morningstar Manager Research

Morningstar Manager Research

Summary

The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy's effective investment philosophy supports a High Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained an overweight in volatility exposure and an underweight in quality exposure compared with category peers. High volatility exposure is attributed to companies with a higher standard deviation of returns. And a low quality exposure is rooted in stocks with higher financial leverage and lower profitability. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Above Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Rated on Published on

Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage.

null Morningstar Manager Research

Morningstar Manager Research

Process

High

JPMorgan Small Cap Value Fund earns a High Process Pillar rating.

The predominant contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 57%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.2 stars, also influences the rating. Respectable risk-adjusted performance also strengthens the process, as shown by the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk.

This strategy, over time, has preferred smaller market-cap companies, compared with others in the Small Value Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Looking at additional factor exposure, this strategy has exhibited a tilt toward high-volatility stocks or the shares of companies with histories of the higher standard deviation of returns, compared with Morningstar Category peers in the last few years. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. In recent months, the strategy was more exposed to the Volatility factor compared with its Morningstar Category peers as well. This strategy has also tilted toward low-quality stocks, companies with higher financial leverage and lower profitability over peers in recent years. Such positions do not tend to provide much ballast for a portfolio. Similarly, in recent months, the strategy also had less exposure to the Quality factor than peers. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum is based on the premise that market outperformers will continue to outperform, and laggards will continue to lag. This means that managers are overweighting stocks currently on a winning streak. In this month, the strategy also had more exposure to the Momentum factor over its 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 real estate by 5.9 percentage points in terms of assets compared with the category average, and its financial services allocation is similar to the category. The sectors with low exposure compared to category peers are industrials and consumer cyclical, underweight the average by 6.3 and 4.2 percentage points of assets, respectively. The strategy owns 359 securities and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 9.4% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 25.7%. And finally, in terms of portfolio turnover, this portfolio's holdings turn over more often than comparable products in its peer group, possibly resulting in higher costs for investors and a drag on performance.

Rated on Published on

JPMorgan Small Cap Value Fund earns an Average People Pillar rating.

null Morningstar Manager Research

Morningstar Manager Research

People

Average

Phillip D. Hart, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 13 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, indicating that their risk-adjusted returns have underperformed the category average. Phillip D. Hart draws on a supporting cast of three additional listed managers. Together they average nine years of listed portfolio management experience. As a team, they manage seven investment vehicles together, with a Bronze asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha in aggregate. The management team is invested in the fund, but the maximum investment by any manager is between$ 100,000 and$ 500,000. An investment of more than$ 1 million would be ideal to align managers' interests with those of the fund's investors.

Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Rated on Published on

A well-resourced, thoughtful, and disciplined steward of client assets, JPMorgan Asset Management maintains an Above Average Parent rating.

Associate Director Emory Zink

Emory Zink

Associate Director

Parent

Above Average

As of 2022, this investment stalwart manages more than USD 2.5 trillion in AUM. Composed of various global cohorts and diverse 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.

Rated on Published on

This strategy's Institutional share class has endured varying fortunes.

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Morningstar Manager Research

Performance

It has been strong over the short term but disappointing over the long term. Over the past five years, the fund outperformed the category index, the Russell 2000 Value Index, by 42 basis points, and trailed the category's average return by 1.2 percentage points. More importantly, on a 10-year basis, this share class fell behind the index by an annualized 55 basis points.

The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. This subpar risk-adjusted performance has not resulted in higher volatility, as measured by their standard deviation, which is close to the benchmark.

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Low-cost investments routinely outperform high-cost investments.

null Morningstar Manager Research

Morningstar Manager Research

Price

Thus, assessing cost is a critical step in any investment evaluation. This share class sits in the second-cheapest quintile of its Morningstar Category. Its competitive expense ratio, taken together with the fund’s People, Process, and Parent Pillars, indicates that this share class should be able to deliver positive alpha compared with its category benchmark, explaining its Morningstar Medalist Rating of Silver.

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Portfolio Holdings PSOPX

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 9.1
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

JPMorgan Prime Money Market Inst

2.97 43.7 Mil
Cash and Equivalents

Encore Wire Corp

1.11 16.3 Mil
Industrials

OFG Bancorp

1.10 16.1 Mil
Financial Services

First BanCorp

1.05 15.5 Mil
Financial Services

Rush Enterprises Inc Class A

0.92 13.6 Mil
Consumer Cyclical

Essent Group Ltd

0.87 12.8 Mil
Financial Services

Knowles Corp

0.86 12.7 Mil
Technology

Commercial Metals Co

0.82 12.1 Mil
Basic Materials

SM Energy Co

0.80 11.8 Mil
Energy

Customers Bancorp Inc

0.80 11.7 Mil
Financial Services