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JPMorgan Growth Advantage A VHIAX

Medalist Rating as of | See JPMorgan Investment Hub
  • NAV / 1-Day Return 33.26  /  −0.54 %
  • Total Assets 18.4 Bil
  • Adj. Expense Ratio
    1.040%
  • Expense Ratio 1.040%
  • Distribution Fee Level Average
  • Share Class Type Front Load
  • Category Large Growth
  • Investment Style Large Growth
  • Min. Initial Investment 1,000
  • Status Open
  • TTM Yield
  • Turnover 38%

USD | NAV as of Apr 18, 2024 | 1-Day Return as of Apr 18, 2024, 11:21 PM GMT+0

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Morningstar’s Analysis VHIAX

Medalist rating as of .

J.P. Morgan Manager Tim Parton to Retire in March 2024; Ratings Remain Unchanged

Our research team assigns Bronze ratings to strategies they’re confident will outperform a relevant index, or most peers, over a market cycle on a risk-adjusted basis.

J.P. Morgan Manager Tim Parton to Retire in March 2024; Ratings Remain Unchanged

null Adam Sabban

Adam Sabban

Analyst Note

J.P. Morgan portfolio manager Tim Parton's retirement will officially take effect after the close of business on March 1, 2024. The firm pointed to the veteran manager's intentions to step away from money management back in 2022 and had long prepared for the eventuality. He'll step down from his roles on strategies including JPMorgan Growth Advantage, JPMorgan Mid Cap Growth, and JPM America Equity. Comanager Felise Agranoff, who has worked alongside Parton as an analyst and comanager for years, will assume lead duties on these strategies as expected. The strategy's People Pillar rating and Morningstar Medalist Ratings remain unchanged.

Published on

Makes the most of its resources.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Summary

JPMorgan Growth Advantage is transitioning to a new lead manager, but it has the right tools and framework to continue its success.

This is an all-cap strategy that harvests the best ideas from across an accomplished research platform. J.P. Morgan boasts a 20-plus member core large-cap analyst team, but there is also a dedicated large-growth team whose insights have an impact, too. While lead manager Tim Parton’s picks have added value over the course of his career, the pool of large-cap ideas he’s picked from been a good one, as evidenced by strong results across the firm’s strategies. Mid-cap stocks remain a key differentiator, and incoming lead manager Felise Agranoff has the requisite background having worked alongside Parton on the highly rated JPMorgan Mid Cap Growth for well over a decade. Small-cap stocks haven’t played much of a role since 2018 because of liquidity constraints, but also because of a diminished opportunity set in the minds of the managers. The strategy’s ability to get the best out of many inputs is enabled by a combination of high-quality talent, a cohesive culture, and talent retention such that professional relationships and trust can be built. These all still stand in the strategy’s favor even though it is losing its experienced leader in 2024.

Agranoff doesn’t have a stand-alone track record as a large-cap stock-picker, but she has plenty of lead time to hit the ground running once she assumes full control in early 2024. She’ll also get help from comanager Larry Lee, who brings decades of large-cap expertise.

The strategy’s flexibility to invest across market caps has been a boon to performance historically, and that will remain a feature in addition to relatively low turnover and a slight momentum bias. An awareness of factor exposures and positioning relative to the strategies from which the portfolio draws ideas should also be consistent. While the portfolio’s gradual pivot up the market-cap ladder could be construed as a negative, the team has generated positive alpha in the large-cap segment.

This offering is a diversified fund from a regulatory perspective, so it may not always be able to match the benchmark’s stakes in the market’s biggest companies. That hasn’t prevented it from performing well over the past few years, but it could be a headwind if market leadership remains narrow at the top. Still, over the long term, this offering has what it takes to stand out.

Rated on Published on

This fund benefits from flexibility and conviction, earning an Above Average Process rating.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Process

Above Average

While it falls in the large-growth Morningstar Category, this strategy has long benefited from the ability to invest in small- and mid-cap companies. Indeed, many of its best ideas weren’t large caps when first purchased in the portfolio, such as Tesla TSLA in 2011, Netflix NFLX in 2013, and software company Veeva Systems VEEV in 2013. Managers Tim Parton and Felise Agranoff have free range to select the top ideas from across J.P. Morgan's growth equity platform, though they ensure the resulting portfolio doesn't fall too far out of line from the sector and market-cap composition of the Russell 3000 Growth Index. While Agranoff isn’t an experienced large-cap investor, she has plenty of analyst resources and isn’t likely to stray off course in that segment.

The strategy usually leans toward stocks with higher growth and momentum profiles than the benchmark. However, according to Morningstar's data, its exposure to the growth factor has steadily declined since mid-2019 as Parton tilted away from fast-growing stocks with lofty valuations in favor of those with less price risk in sectors such as industrials, materials, and consumer staples. That repositioning paid off as growth stocks have sold off in 2021 and 2022. But the managers pivoted back toward faster growers heading into 2023, which helped boost results as those stocks came back into favor.

This is an all-cap portfolio, but it has leaned more heavily on large caps in recent years. As of June 2023, large- and mega-cap stocks took up about 80% of assets versus around 50% a decade earlier. Asset growth at this strategy and at JPMorgan Small Cap Growth OGGFX likely has played a role in a shift away from small caps, although the closing of the small-cap fund in 2021 helps preserve this fund's ability to own some of the same stocks, even if at modest weightings. The portfolio still owns more mid-cap stocks than the Russell 3000 Growth Index prospectus benchmark. At the end of June 2023, its 20% mid-cap stake was roughly twice that of the benchmark.

Though the larger names at the top of the portfolio are competitively advantaged and profitable, the rest of the portfolio is less so. The overall portfolio has less exposure to companies with wide or narrow Morningstar Economic Moat Ratings than the benchmark. The portfolio's average long-term earnings growth projections tend to exceed those of the benchmark, but so do its average valuation measures. This makeup courts volatility, but lead manager Tim Parton was cognizant of that and trimmed exposure to areas such as technology leading up to the 2021-22 growth-stock selloff, which helped preserve capital.

Key active bets versus the benchmark include underweightings in the largest companies such as Apple AAPL and Microsoft MSFT. Parton has preferred smaller companies perceived to have greater upside potential.

Rated on Published on

A key manager transition will take place in early 2024 when longtime manager Tim Parton retires, but successor Felise Agranoff has strong enough surrounding resources to retain an Above Average People rating.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

People

Above Average

This fund’s success has always been a team effort. While Parton has added value as a stock-picker over two decades, he has benefited from a good pool of ideas generated by the three other strategies that serve as feeders for this fund. Giri Devulapally of JPMorgan Large Cap Growth SEEGX and Eytan Shapiro of JPMorgan Small Cap OGGFX growth bring decades of experience and good track records. Incoming lead manager Agranoff has been a contributor here, too, through her work as comanager of JPMorgan Mid Cap Growth HLGEX since 2016, and before that as a top-performing smid-cap analyst. Mid-caps typically take up around 30% of assets here and will remain a key differentiator versus large-growth peers.

While Agranoff isn’t a proven large-cap manager, she has plenty of time to prepare for her new role and will also still benefit from dedicated large- and smid-cap analyst teams that drive ground-level research. Members have an average of over 15 years of industry experience and around eight at J.P. Morgan. She’ll also benefit from synergies with J.P. Morgan’s 20-plus member core research team, which supports some of the firm’s other large-cap strategies.

Agranoff will get assistance from an experienced large-cap investor in Larry Lee, who is now a comanager. Lee has nearly 30 years of industry experience, 17 of them at J.P. Morgan.

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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.

Rated on Published on

Manager Tim Parton has put up an impressive record on this best-ideas fund.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Performance

From his January 2002 start through July 2023, the A share class' 11.7% annualized return beat the large-growth category average and the Russell 3000 Growth Index benchmark by 3.8 and 2.0 percentage points, respectively. The fund outpaced these bogies consistently. In rolling three-year periods over this time, it did better than the peer average 100% of the time and the benchmark more than 80% of the time. It has also steadily outperformed a custom benchmark composed of the component strategies from which it draws ideas, thanks to Parton’s stock-picking acumen. Some of the strategy’s best stocks include Tesla, Mastercard MA, and Generac GNRC—all multiyear holdings that returned multiples of their initial investment.

Investors should keep in mind that the strategy has also been volatile, tending to capture more of the market's steady gains and sharp downturns. It fared slightly worse than its benchmark during the market's sharpest drawdowns in years such as 2008, 2011, 2018, and 2020. Its most noticeable period of underperformance, though, was early in 2016, a time when investors fled high-growth stocks in response to fears of a slowing global economy. To avoid another such result, Parton pulled back on fast-growing stocks beginning in 2019, which cushioned its subsequent fall when growth stocks fell out of favor. The fund’s only modest underperformance relative to its benchmark in 2021 and 2022 helped preserve its gains from a huge 2020 in which it gained over 50%.

Despite an underweighting in mega-cap stocks that have dominated the first seven months of 2023, the fund has mostly kept up thanks to strong picks such as Nvidia NVDA.

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It’s critical to evaluate expenses, as they come directly out of returns.

Senior Analyst Adam Sabban

Adam Sabban

Senior Analyst

Price

Based on our assessment of the fund’s People, Process, and Parent Pillars in the context of these expenses, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Medalist Rating of Bronze.

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Portfolio Holdings VHIAX

  • Current Portfolio Date
  • Equity Holdings
  • Bond Holdings
  • Other Holdings
  • % Assets in Top 10 Holdings 48.1
Top 10 Holdings
% Portfolio Weight
Market Value USD
Sector

Microsoft Corp

9.86 1.9 Bil
Technology

NVIDIA Corp

6.83 1.3 Bil
Technology

Amazon.com Inc

6.23 1.2 Bil
Consumer Cyclical

Apple Inc

5.84 1.1 Bil
Technology

Meta Platforms Inc Class A

5.73 1.1 Bil
Communication Services

Alphabet Inc Class C

3.67 692.6 Mil
Communication Services

Mastercard Inc Class A

3.07 579.3 Mil
Financial Services

Eli Lilly and Co

2.51 474.3 Mil
Healthcare

Broadcom Inc

2.46 463.9 Mil
Technology

Regeneron Pharmaceuticals Inc

1.95 368.3 Mil
Healthcare