JPMorgan Mid Cap Equity I VSNGX

JPMorgan Mid Cap Equity I’s strong process and parent firm underpin this strategy's Morningstar Quantitative Rating of Bronze. The strategy charges fees in line with its similarly distributed peers, priced within the middle quintile.

The strategy's investment process inspires confidence and earns an Above Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it is currently, although not consistently, underweight in momentum exposure and volatility exposure compared with category peers. Momentum is the premise that stocks that have recently outperformed will continue to do so. With low momentum exposure, the portfolio is holding stocks that managers believe to be undervalued. And low volatility exposure is rooted in stocks that have a lower standard deviation of returns. The strategy is part of a first-rate parent, as shown by a high lineup success ratio and overall attractive fees. These attributes support its Above Average Parent Pillar rating. Finally, the strategy's longest-tenured manager is experienced, but still gets an Average People Pillar rating.

Morningstar's evaluation of this fund's process seeks to understand management's investment philosophy, and whether it has been applied consistently over time and can add value across the market cycle. JPMorgan Mid Cap Equity Fund earns an Above Average Process Pillar rating.

This strategy tends to hold larger, growthier companies than its average peer in the Mid-Cap Blend Morningstar Category. Analyzing additional factors, there is no consistent pattern in the differences between the factors of the fund's portfolio and its Morningstar Category peers over the past few years, according to our research, while the strategy had less exposure to momentum stocks or companies compared with Morningstar Category peers in the most recent month. Momentum strategies typically bet that stocks that have recently outperformed will continue to do so, and those that have recently underperformed will keep lagging. Avoiding the former and buying the latter could indicate that managers are averse to chasing momentum. The strategy also had similar exposure to high-volatility stocks compared with Morningstar Category peers in the most recent month. These low-risk stocks are typically at their best when markets are not. Low volatility exposure contributes to limited loss on the downside at the cost of a lag in bull markets. In addition, the strategy had more exposure to high-yield stocks compared with Morningstar Category peers in recent months. High-yield stocks tend to be associated with more mature, profitable businesses that can grow as well as provide a stream of income. Such stocks could suffer, however, if setbacks force them to cut their dividends. 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 healthcare relative to the average peer in its category by 3.9 and 3.8 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are basic materials and industrials, with basic materials underweighting the average portfolio by 3.3 percentage points of assets and industrials similar to the average. The portfolio is composed of 209 holdings and is diversified among those holdings. In its most recent portfolio, 11.0% of the fund’s assets were concentrated in the top 10 fund holdings, compared to the category average's 16.6%. And finally, in terms of portfolio turnover, looking at year-over-year movements, 33% of the fund's holdings have turned over, whether through increasing, decreasing, or changing a position.

Despite its managers' lack of personal investment, JPMorgan Mid Cap Equity Fund benefits from a market-tested longest-tenured manager. Together, this earns the team an Average People Pillar rating. Jonathan K.L. Simon, 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 3.8 stars, demonstrating above-average risk-adjusted performance. Jonathan K.L. Simon is supported by an experienced team, being able to draw on four additional listed managers, who average 21 years of portfolio management experience. None of the managers here invest any money in the strategy, which is disappointing, as such investments help align managers' interests with fundholders.

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.

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 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.

This strategy's Institutional share class has lapped both its peers and the category benchmark. This share class led its average peer by an annualized excess return of 1.5 percentage points over a 10-year period. And it also beat the category index, the Russell Midcap Index, by an annualized 82 basis points over the same period.

The risk-adjusted performance only continues to make a case for this fund. The share class had a higher Sharpe ratio, a measure of risk-adjusted return, than the index over the trailing 10-year period. Often, higher returns are associated with more risk. However, this strategy stayed in line with the benchmark's 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.

It is critical to evaluate expenses, as they come directly out of returns. This share class imposes a fee that ranks in its Morningstar Category's middle 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, leading to its Morningstar Quantitative Rating of Bronze.