JPMorgan International Equity Fund Class I VSIEX

JPMorgan International Equity displays many of the hallmarks required for delivering strong long-term results, supported by a robust and repeatable process and an experienced, well-resourced team. As such, we maintain the Above Average People and High Process Pillar ratings.

There have been some changes within the management team since our last review. As of September 2025, Tom Murray has assumed sole lead manager responsibilities for the core-oriented strategies: International Equity, International ADR, and International Focus. At the same time, he stepped down from managing International Growth. Meanwhile, Shane Duffy has remained lead manager for International Growth but has relinquished his roles on International Equity, International ADR, and International Focus.

Murray has led this strategy since September 2017. He brings 28 years of experience, all with J.P. Morgan, and has served as a comanager since 2004. He is supported by comanagers James Sutton and Zenah Shuhaiber, who joined the team in 2020 and 2022, respectively.

The global research analyst network continues to form the bedrock of the approach. Analysts follow a consistent framework to assess quality and valuation, which directly informs position-sizing decisions in the final 70-100 stock portfolio. Management aims for stock selection to be the primary driver of returns and therefore seeks to minimize unintended sector, country, and style biases relative to the MSCI EAFE Index prospectus benchmark. For example, the team is willing to pay up for select growth-oriented opportunities, but valuation remains an important discipline, helping ensure the portfolio typically lands in the core portion of the Morningstar Style Box.

Since Murray became lead manager in September 2017 through January 2026, the mutual fund’s institutional shares have returned 7.0% annualized, trailing both the MSCI EAFE Index prospectus benchmark (8.1%) and the foreign large-blend Morningstar Category average (7.4%). Weak results in 2024 and 2025 have weighed on overall tenure-long performance. Despite recent headwinds, this strategy continues to possess all the traits required to bounce back.

The strategy’s investment approach is clearly defined, robust, and consistently applied, earning it a High Process rating.

The team focuses on non-US companies that demonstrate strong balance sheets, high profitability, and capable management teams. Idea generation is fueled by the firm’s extensive regional research network, whose analysts conduct deep fundamental research and assign five-year expected return targets. Each stock is also categorized as premium, quality, standard, or challenged under the firm’s strategic classification framework. Premium and quality companies tend to operate in attractive industries with controllable external risks and exhibit solid balance sheets, strong leadership, and healthy cash flow prospects, while standard and challenged names lack durable competitive advantages.

Management is comfortable paying up for higher-quality companies, and roughly two-thirds of the portfolio typically sits in the premium and quality tiers. Even so, valuation remains a key consideration, helping maintain a balanced overall style profile; historically, the strategy has often landed in the core segment of the style box.

The resulting portfolio holds about 70–100 stocks, with each position capped at 5%. Because the team wants stock selection to be the primary return driver, sector and country exposures are kept close to those of the MSCI EAFE Index prospectus benchmark. While the strategy can allocate up to 15% of assets to emerging markets, actual exposure has rarely risen above the mid-single-digit range.

This strategy shares many traits with its more concentrated sibling, JPMorgan International Focus, but there are some differences. JPMorgan International Equity is benchmarked to the MSCI EAFE Index, which excludes emerging markets, but JPMorgan International Focus is benchmarked to the broader MSCI ACWI ex USA Index category benchmark, which includes emerging markets. The MSCI EAFE Index also excludes Canada, so this strategy won’t own Canadian stocks, but they can be owned by International Focus. The strategy's portfolio exposures reinforce that management is cognizant of balancing quality and valuation. Quality metrics like returns on invested capital have trended above the prospectus benchmark and the category index. At the same time, price multiples like price/earnings have typically been slightly higher than both core indexes over the years but well below their growth counterparts.

As of December 2025, the strategy’s largest sector overweight was in consumer discretionary at 2.3%, a modest tilt. Healthcare represented the biggest underweight at 2.8%. Financials, while slightly underweight at 1.7%, remained the strategy’s largest absolute sector exposure at 23.6%. From a regional perspective, the UK was the largest overweight at 2.8%. Although the portfolio remained underweight Japan, the country still accounted for 20.5% of assets and has become an increasingly important source of new ideas. Recent additions such as Toyota and Nintendo highlight the team’s renewed focus on opportunities within the Japanese market in recent years.

There have been several personnel changes since our last review, but the depth and experience of the core management team, supported by a strong and well-resourced analyst group, continue to justify an Above Average People rating.

As of September 2025, Tom Murray has assumed sole lead manager responsibilities for the core-oriented strategies: International Equity, International ADR, and International Focus. At the same time, he stepped down from managing International Growth. Meanwhile, Shane Duffy has remained lead manager for International Growth but has relinquished his roles on International Equity, International ADR, and International Focus.

These shifts are part of a broader initiative to more clearly align portfolio management responsibilities with distinct style cohorts, allowing managers to focus more deeply on their areas of expertise. While clearer distinctions between the core and growth teams are now in place, regular interaction and debate with Duffy and the wider growth team continue.

Murray has led this strategy since September 2017. He brings 28 years of experience, all with J.P. Morgan, and has served as a comanager since 2004. He is supported by comanagers James Sutton and Zenah Shuhaiber, who joined the team in 2020 and 2022, respectively. Sutton joined J.P. Morgan in 2010 and previously served as the team’s metals and mining specialist. Shuhaiber has been with the firm since 2005 and has managed both global and European equity mandates. Both bring extensive firm experience and meaningful sector and regional expertise, while also contributing to a clear path for long-term succession planning.

The depth and breadth of J.P. Morgan’s research function is another key strength, underpinned by an extensive global analyst team. The managers benefit from access to career analysts based around the world who follow a consistent research framework. This is a notable competitive advantage, and the team makes full and effective use of it. Strong analyst research is fundamental to the strategy’s success, supported by a deep and talented pool of career analysts, a commonly applied research process, and a robust track record in stock selection.

J.P. Morgan continues to build a track record of strong stewardship, supporting a Parent rating upgrade to High from Above Average.

With more than USD 4 trillion in assets under management (including USD 1.3 trillion in money market funds) and a broad reach, J.P. Morgan is among the largest active asset managers in the US, Europe, and Asia. Although some multi-asset offerings have struggled over the past five years, prompting new leadership to make changes to investment teams, its equity and fixed-income teams boast long-tenured portfolio managers who practice repeatable investment processes that have generally produced strong long-term results. Most of its funds are core building blocks with long lifetimes, though its lineup around the world also includes more-specialized options: Two options-based equity-income exchange-traded funds, launched in 2020 and 2022, are now among the firm’s largest. J.P. Morgan has been an early mover in offering active ETFs, having converted 12 of its open-end mutual funds to the structure and launching others. It isn’t always at the forefront of emerging trends. While it has filed registration statements with the Securities and Exchange Commission for an interval fund and an ETF investing in private markets, it hasn’t yet introduced such an option for all investors, whether on its own or in partnership with another asset manager, unlike some of its closest competitors.

To support the firm’s diverse investment offerings, J.P. Morgan has invested heavily in both portfolio management tools and its client organization. Over the past 10 years, the firm has developed robust proprietary technology with advanced analytics and broad buy-in from investment analysts, portfolio traders, and portfolio managers, all of whom have easy access to the platform. The firm also stands apart for its demonstrated commitment to clients. In the early 2000s, J.P. Morgan began pivoting its engagement with financial advisors to adopt a more consultative approach, supported by its sought-after Guide to the Markets research series that focuses on investor education, not product pitches. This perspective can help clients stay the course, supporting positive investor outcomes.

Incentives reinforce alignment with fundholders. Beginning more than 10 years ago, investment team compensation is tied to three-, five-, and 10-year performance, and portfolio managers must invest at least half of their deferred compensation in J.P. Morgan strategies. Many firms encourage portfolio managers to invest alongside fundholders, but J.P. Morgan goes a step further in requiring client-facing individuals to invest substantial portions of their incentive compensation in the funds.

Although some funds still face high cost hurdles, more than half of share classes charge competitive fees relative to peers.

Tom Murray has led this strategy since September 2017. From then through January 2026, the mutual fund’s institutional shares returned 7.0% annualized, trailing the MSCI EAFE Index prospectus benchmark’s 8.1% and the foreign large-blend category average of 7.4%. Weak results in both 2024 and 2025 have weighed on performance over his tenure.

While the offering is well balanced from a style perspective, it has had a slight growth signature. That helps explain why the strategy’s best years have tended to be when growth leads the way, such as in 2017, 2019, and 2020. Conversely, the offering struggled in 2022 and 2025, when value outperformed growth.

After a strong 2023, the strategy had an unexpectedly poor showing in 2024. The mutual fund gained just 1.4% for the year, lagging the prospectus benchmark’s 3.8% and the category index’s 4.8%. The main culprit versus the prospectus benchmark was poor stock selection in consumer staples, where food group Nestle, in addition to beverage makers Pernod Ricard, Heineken, and Carlsberg, detracted. Samsung Electronics was another laggard. The fact that emerging markets outperformed developed ex-US markets helped explain the bigger performance differential versus the category index and peers.

2025 was another relatively weak year for the strategy. The I share class returned 25.9%, underperforming the category average and the index by 4.5% and 5.4%, respectively. Stock selection was generally soft across most sectors, except for information technology. Financials, consumer discretionary, and materials were the weakest contributors. From a regional perspective, the UK was the most challenging area, where overweight positions in RELX, 3i Group, and London Stock Exchange Group all detracted from performance.

JPMorgan International Equity I's Prospectus Adjusted Expense Ratio is 0.7% per year. It places it in the second-cheapest quintile of the Morningstar US Fund Foreign Large Blend Category, where the median fee is 0.82% per year. This cost positioning translates into a Medalist Rating Price Score of 0.6, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.