JPMorgan Ultra-Short Municipal I USMTX

The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.

The strategy gets an Average Process Pillar. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in cash and an underweight in debt with three- to five-year maturities compared with category peers. The strategy’s management team earns an Above 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.

JPMorgan Ultra-Short Municipal Fund earns an Average Process Pillar rating.

The largest contributor to the rating is the parent firm's five-year risk-adjusted success ratio of 56%. 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. The parent firm's excellent risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also bolsters the process. Lastly, the process is limited by the fund's unimpressive long-term risk-adjusted performance. This can be seen in its five-year alpha calculated relative to the category index, which suggests that the process has struggled over that period.

Compared with other funds in the Muni National Short Morningstar Category, this fund takes on higher credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been substantially overweight cash in recent years. In the latest month, the strategy has relatively overweighted cash compared with its peers as well. Additionally, there's been a bias away from debt with three- to five-year maturities over the past few years. Similarly, in recent months, the strategy also had less exposure to debt with three- to five-year maturities than peers. Finally, during the past few years, the fund leaned away from AAA rated bonds. In recent months, the strategy also had less exposure to AAA rated bonds compared to its peers.

This strategy has a 2.9% 12-month yield, higher than its average peer's 2.5%. Plus, its 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return) sits at 3.3%. While a higher yield may deliver more income, it also tends to indicate higher credit risk. The portfolio has a lower average surveyed credit quality of BBB, compared with the typical peers' A and it holds no non-investment-grade assets, despite the average peers' 1%. Strategies with more credit risk may have a higher return, but they are riskier.

Even though this strategy’s track record dates back to May 2016, the listed management team joined within the past three years. Therefore, the track record achieved under the previous team is not representative of the fund’s current merits.

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.

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.

The fund’s long-term track record is largely no longer applicable, as it does not necessarily represent the current strategy. The new team took the reins in February 2024 and looking at their performance so far, they have posted admirable results. Since the manager change one month ago, the strategy earned a 0.1% return through month-end, mirroring its typical peer's 0.1% and leading the Bloomberg Barclays Municipal 3 Year 2-4 Year Maturity Bond Index's 0.2% loss. With this narrow of a time frame with the new team, it is difficult to meaningfully assess the fund’s risk.

This share class imposes a fee that ranks in its Morningstar Category's cheapest quintile. Despite this fee, the fund’s People, Process, and Parent Pillars indicate this share class is unlikely to deliver positive alpha relative to its category benchmark, leading to its Morningstar Medalist Rating of Neutral.