JPMorgan New York Tax Free Bond A VANTX

JPMorgan New York Tax Free Bond A boasts strong People and Process Pillar ratings, but other weaknesses hold this strategy's Morningstar Quantitative Rating at Neutral. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The strategy has been able to retain portfolio managers, which builds stability and continuity and results in an Above Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating. The portfolio has overweighted AA rated bonds and debt with 10- to 15-year maturities compared with category peers. The strategy is part of a first-rate parent, as shown by a favorable lineup success ratio and overall attractive fees. These attributes support its Above Average Parent Pillar rating.

Morningstar's style-agnostic investment process evaluation looks for strategies with a philosophy distinctive enough to generate standout results in the future. JPMorgan New York Tax Free Bond Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Muni New York Intermediate 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 does not consistently lean toward or away from corporate bonds, but the current portfolio is underweight its peers.

This strategy's 12-month yield is 1.9%, which is neck-and-neck with its average peer's. It also has a 2.8% 30-day SEC yield (a measure similar to yield-to-maturity). The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated A.

Even with managers' lack of personal investments, the team managing JPMorgan New York Tax Free Bond Fund stands out with a stable corps of portfolio managers. This strength bolsters the strategy's Above Average People Pillar rating. David Sivinski, the longest-tenured manager on the strategy, boasts over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 2.8 stars, demonstrating underwhelming risk-adjusted performance. Despite having a small team, the two listed managers boast 23 years of portfolio management experience. The team has successfully retained portfolio-manager talent, providing continuity for strategies as long-term stability tends to support positive results. There have been no documented departures within the past 10 years. None of the managers here invests any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

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.

This strategy’s A share class has mirrored both its average peer and category benchmark. Over the past 10-year period, this share class' 1.0% return was about even with the average peer's performance. It trailed the category benchmark, Bloomberg Barclays Municipal New York Tax-Exempt Bond Index, by an annualized 84 basis points over the same period.

When risk is properly accounted for, the strategy is not any more compelling. The share class trailed the index with a lower Sharpe ratio, a measure of risk-adjusted returns, over the trailing 10-year period. But notably, these subpar risk-adjusted results have not come with a rockier ride for investors. This strategy took on similar risk as the benchmark, as measured by standard deviation. Finally, 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.

By minimizing costs, investors can maximize their expected returns. This share class levies a fee that ranks in its Morningstar Category's second-cheapest quintile. Even with this fee, the fund’s People, Process, and Parent Pillars suggest this share class is probably best avoided, as it does not offer investors a good chance at producing positive alpha versus its peer benchmark, earning it a Morningstar Quantitative Rating of Neutral.