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Undiscovered Managers Behavioral Val A UBVAX

Medalist Rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 76.84  /  0.69 %
  • Total Assets 8.5 Bil
  • Adj. Expense Ratio
    1.240%
  • Expense Ratio 1.240%
  • Distribution Fee Level Average
  • Share Class Type Front Load
  • Category Small Value
  • Investment Style Small Value
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield 1.42%
  • Turnover 39%
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Morningstar’s Analysis UBVAX

Medalist rating as of .

A strong management team and sound investment process underpin Undiscovered Managers Behavioral Val A's 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.

A strong management team and sound investment process underpin Undiscovered Managers Behavioral Val A's Morningstar Medalist Rating of Silver.

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Morningstar Manager Research

Summary

Fees are a weakness here. The strategy's lofty fees are a high hurdle to clear, as it is priced within the second-costliest quintile among peers.

The strategy's managers invest alongside shareholders, which helps it earn a High People Pillar rating. The strategy's effective investment approach earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant underweight position in quality exposure and has a considerable overweight in yield exposure compared with category peers. Low quality exposure is attributed to stocks with higher financial leverage and lower profitability. And a high yield exposure is rooted in holding high dividend-paying or buyback stocks. The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

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.

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Morningstar Manager Research

Process

Above Average

Undiscovered Managers Behavioral Val Fd earns an Above Average Process Pillar rating.

The predominant contributor to the rating is the fund's impressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. The parent firm's five-year risk-adjusted success ratio of 57% also bolsters the rating. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. Their commendable success ratio suggests that the firm does well for investors and that this fund may benefit from that. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

This strategy targets deeper value plays than its peers’ average in the Small Value Morningstar Category. But in terms of market capitalization, it is on par with peers. Analyzing additional factors, this strategy tilts consistently toward stocks with lower quality or the shares of companies with more financial leverage and lower profitability, compared with Morningstar Category peers over the past few years. Lacking this ballast, the fund's prospects will rest on its ability to surpass peers during economic booms. In the latest month, the strategy was also less exposed to the Quality factor compared with Morningstar Category peers. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. In addition, this strategy has had a bias away from momentum stocks during these years. Momentum tends to be a powerful force in asset markets, as stocks that have done well recently usually continue to do so in the short term. As top performers change, this can sometimes be hard to capture without higher trading costs. In recent months, the strategy also had less Momentum factor exposure than 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 financial services and utilities relative to the category average by 16.1 and 3.7 percentage points, respectively. The sectors with low exposure compared to category peers are technology and industrials, underweight the average by 6.8 and 4.2 percentage points of assets, respectively. The portfolio is composed of 99 holdings and is relatively concentrated. Specifically, 30.4% of the fund’s assets are housed within the top 10 holdings, as opposed to the typical peer's 25.7%. And in closing, in terms of portfolio turnover, this fund trades less regularly than the typical peer in its category, which may result in a lower cost to investors.

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Undiscovered Managers Behavioral Val Fd earns a High People Pillar rating.

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Morningstar Manager Research

People

High

The primary contributor to the rating is its parent firm's five-year success ratio of 58%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median return for the period. The rating also gains because at least one manager has invested more than$ 1 million in the strategy. The portfolio managers' outperformance at the funds they run, as measured by their combined three-year manager excess returns, supports the rating as well.

David M. Potter, the longest-tenured manager on the strategy, provides strong guidance, bringing forward 19 years of listed portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.8 stars, indicating that their risk-adjusted returns surpassed the category average. Despite having a small team, the two listed managers boast 12 years of listed portfolio management experience.

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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.

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This strategy’s A share class has lapped both its peers and the category benchmark.

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Morningstar Manager Research

Performance

This share class outpaced its average peer by 2.2 percentage points annualized over a 10-year period. And it also exceeded the return of the category benchmark, the Russell 2000 Value Index, by an annualized 2.2 percentage points over the same period.

The risk-adjusted performance only continues to make a case for this fund. The share class led the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing 10-year period. These strong risk-adjusted results have not come with a bumpier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. However, 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.

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Fees compound over time and reduce returns, so it is critical for investors to minimize expenses.

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Morningstar Manager Research

Price

This share class imposes a fee that places it in its Morningstar Category's second-costliest quintile. Despite this fee, the fund’s People, Process, and Parent Pillars indicate this share class can produce positive alpha relative to its category benchmark, earning it a Morningstar Medalist Rating of Silver.

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Portfolio Holdings UBVAX

  • Current Portfolio Date
  • Equity Holdings 94
  • Bond Holdings 0
  • Other Holdings 2
  • % Assets in Top 10 Holdings 30.1
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector
3.89
314,857,699
Financial Services
3.71
300,205,417
Financial Services

JPMorgan Prime Money Market Inst

3.44
278,173,493
Cash and Equivalents
3.30
266,567,675
Financial Services
3.20
259,003,014
Financial Services
2.85
230,869,831
Healthcare
2.81
227,237,126
Consumer Cyclical
2.80
226,578,641
Energy
2.73
221,139,369
Industrials
2.43
196,365,006
Consumer Cyclical