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JPMorgan Tax Aware Real Return A TXRAX

Quantitative rating as of
  • NAV / 1-Day Return 9.44  /  0.21 %
  • Total Assets 560.0 Mil
  • Adj. Expense Ratio
    0.740%
  • Expense Ratio 0.750%
  • Distribution Fee Level Average
  • Share Class Type Front Load
  • Category Muni National Interm
  • Credit Quality / Interest Rate Sensitivity Medium / Limited
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 1.79%
  • Effective Duration 3.36 years
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Morningstar’s Analysis TXRAX

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 Aware Real Return 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 overweight in AA rated bonds and debt with 10- to 15-year maturities compared with category peers. The management team's considerable industry experience 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 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 diverse market conditions, assuming the process is adhered to. JPMorgan Tax Aware Real Return Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Muni National Interm 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 overweight position on AA rated bonds compared to peers. Additionally, there's been an overallocation to debt with 10- to 15-year maturities. And finally, the fund leans meaningfully toward cash.

This strategy has a modest 1.7% 12-month yield, lower than its average peer's 2.1%. In addition, it has a 2.7% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less 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 Tax Aware Real Return Fund benefits from a seasoned team of managers. As the latter outweighs the former, the strategy earns an Above Average People Pillar rating. Richard D. Taormina’s veteran status, with over 25 years of portfolio management experience, imprints a positive mark on the strategy as it brings a wealth of experience to the table. The average Morningstar Rating of the strategies they currently manage is 2.6 stars, demonstrating underwhelming risk-adjusted performance. Richard D. Taormina has an experienced listed co-manager. Together, they average over 30 years of portfolio management experience. 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 greatly improved.

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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This strategy’s A share class has endured varying fortunes. It has been successful over the short term but has been disappointing over the long term. Over the past five years, the fund led the category index, the Bloomberg Barclays Municipal 1-15 Year Bond Index, by 38 basis points, and surpassed its average peer by 2.1 percentage points. More importantly, when looking across a longer horizon, the strategy's track record does not stack up well. On a 10-year basis, this share class fell behind the index by an annualized 85 basis points. One-year performance does not largely affect this share class' rating. However, its impressive 5.2% loss is worth mentioning, a 3.2-percentage-point lead over its average peer, placing it within the top 10% of its category.

The share class had a lower Sharpe ratio, a measure of risk-adjusted returns, than the index over the trailing 10-year period. These subpar risk-adjusted results have not come with the drawback of a bumpier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation.

Price

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It is critical to assess expenses, as they come directly out of returns. This share class lands in the second-costliest quintile of its Morningstar Category. Its pricey expense ratio, 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, explaining its Morningstar Quantitative Rating of Neutral.