JPMorgan Global Allocation I GAOSX

JPMorgan Global Allocation's experienced roster of portfolio managers benefit from the firm's broad resources and sharp analytical tools to shrewdly navigate markets and nimbly implement views. The strategy's institutional, R4, R5, and R6 share classes receive Morningstar Analyst Ratings of Silver, while its A, C, R2, and R3 share classes receive Bronze ratings.

This strategy exercises flexibility across currencies, regions, asset classes, and credit qualities. Duration is unconstrained, and the team may hold up to 80% of the portfolio in cash. Jeff Geller, who has been the lead portfolio manager here since the strategy's inception, and his four comanagers begin by considering the firm's capital market assumptions combined with the output of their proprietary models. The portfolio managers then determine the appropriate asset exposures that reflect their views on relative value and implement those by allocating to underlying sleeves (15 as of April 2022) resourced from across the firm’s specialist teams (global equities, high-yield bonds, and so forth). Derivatives are often used to curate portfolio characteristics at a macro level.

As of April 2022, the portfolio held 59% in equity, with over half in U.S. large-capitalization equities and most of the remainder in international or emerging-markets equities. Tighter monetary policies as well as geopolitical uncertainties have shaped the broad fixed-income exposure, which represented 20% of the portfolio and included allocations to crossover credit, high yield, and income-focused debt. Over the prior year, the team chose to cut dedicated alternatives exposure, continued to use derivatives to manage broad market moves, and limited duration when possible.

Since the strategy's first full month of performance in June 2011 through May 2022, the institutional shares generated a 5.8% annualized return that outpaced the 5.6% return of its Morningstar Global Allocation TR USD category benchmark, the 5.3% of its custom bogy (a 60% MSCI ACWI/40% Bloomberg Global Aggregate combination), as well as the 3.7% of its global allocation Morningstar Category. A more aggressive risk posture and non-U.S. exposures weighed on year-to-date performance through May 2022, but since inception, this strategy has a history of navigating rough markets more often better than not.

Jeff Geller and his team employ a broad toolkit, deep research, and asset-class expertise from across the firm to nimbly position this offering. It continues to merit an Above Average Process rating.

This strategy aims to outstep the returns of a 60% MSCI ACWI/40% Bloomberg Global Aggregate custom benchmark with lower volatility. To do so, it exercises flexibility across currencies, regions (a minimum of 30% in non-U.S. exposures), asset classes (between 10% and 90% in either equities or bonds and a maximum of 60% in alternatives), and credit qualities (no more than 70% in junk bonds). Duration is unconstrained and the team may hold up to 80% of the portfolio in cash.

As a starting point, the strategy’s quintet of portfolio managers consider the firm’s broad intermediate-term market views (6-18 months) and negotiate the resulting themes with the output of the multi-asset group's proprietary models. From there, the decision-makers revisit the portfolio's broad contours, and depending on their perception of relative value across global markets, they may make adjustments to the underlying sleeves (there were 15 as of April 2022, and each represented a stylistic approach to a subasset class managed by one of the firm's well-resourced specialist groups). Depending on the overall desired profile, Geller and his colleagues will hold single securities or derivatives (futures, forwards, puts, calls, and total-return swaps) to curate the final portfolio’s characteristics.

This strategy's contours evolve according to the team’s read on global relative-value opportunities, resulting in a profile that can look very different from one year to the next.

Since its 2011 inception, the strategy's equity exposure ranged from roughly 34% to 75%, and as of April 2022, sat at 59%. Within equities, U.S. large-cap strategies, U.S. small-cap strategies, international equities, and emerging-markets equities represented 57%, 2%, 29%, and 9% of assets, respectively. At the end of 2020, the team introduced a dedicated China A-shares sleeve to the portfolio, citing the country’s higher growth potential relative to other regions of the world coupled with the firm's improving on-the ground capabilities; it most recently occupied 3% of the broader equity allocation.

Tighter monetary policies as well as geopolitical uncertainties have shaped the broad fixed-income exposure, which represented 20% of the portfolio as of April 2022. Global developed-markets government debt represented only 2% of the bond allocation here; at one point in 2011, it occupied half of the total portfolio. Within fixed income, crossover credit (bonds likely to experience an upgrade to investment grade) and high yield represented 37% and 38%, respectively, of the bond holdings. In early 2022, the team introduced a flexible income-oriented bond sleeve to the portfolio (22% of the bond allocation), trusting its manager Andrew Norelli to ferret out opportunities across a volatile debt landscape.

A quintet of portfolio managers benefits from the breadth and depth of resources across the firm, resulting in an Above Average People rating.

Jeff Geller, lead portfolio manager and CIO of the firm's multi-asset group, has helmed this strategy since its 2011 inception. His current comanagers include Grace Koo, who focuses on quantitative approaches to asset allocation, and Eric Bernbaum, who is in charge of portfolio construction and implementation; both joined this strategy in February and December, respectively, of 2014. That trio overlapped with James Elliot, who comanaged here beginning at inception and influenced tactical positioning within the portfolio before his March 2018 departure. Questions followed Elliot's exit around whether the team had the right mix of inputs to execute on its flexible mandate, and in November 2020, two new comanagers expanded the lineup. Michael Feser provides perspectives on risk management and capital market assumptions. Philip Camporeale brings insight around global monetary policies and fixed income to the group.

Geller and his four comanagers determine the asset allocations and curate the total portfolio characteristics, but the underlying subasset sleeves are managed by well-resourced specialist groups from across the firm. As of April 2022, this included a total of 15 distinct sleeves, each led by a reputable sector specialist or two with access to dozens of security analysts, risk specialists, and traders within his or her cohort.

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.

Since the strategy's first full month of performance in June 2011 through May 2022, the institutional shares generated a 5.8% annualized return that outpaced the 5.6% return of its Morningstar Global Allocation TR USD category benchmark, the 5.3% of its custom bogy (a 60% MSCI ACWI/40% Bloomberg Global Aggregate combination), as well as the 3.7% of its global allocation category. The strategy's volatility was higher than all three of those comparative points.

Recent periods have been a challenge. Through most of 2021, the strategy's exposure to emerging-markets equities and global government bonds weighed on performance relative to category peers. The 9.5% return of the institutional shares that year trailed the 11.3% of its category but did outpace the category benchmark's 9.3% and the custom bogy's 8.8%. Year to date through May 2022, the portfolio's more aggressive posture has struggled against both of its benchmarks and the category.

The strategy has navigated many tough investment periods well, though. In 2020, including the pandemic panic selloff, the team deftly managed around shifting market conditions, resulting in a 15.6% return for the institutional shares that was triple its category’s return and outpaced its benchmarks. During 2018's fourth-quarter high-yield selloff, those shares lost less than its category or either benchmark. Over time, shrewd tactical implementation helped the institutional shares outperform its category in eight of the prior 10 calendar years.

It’s critical to evaluate expenses, as they come directly out of returns. The share class on this report levies a fee that ranks in its Morningstar category’s second-cheapest quintile. Based on our assessment of the fund’s People, Process and Parent pillars in the context of these fees, we think this share class will be able to deliver positive alpha relative to the category benchmark index, explaining its Morningstar Analyst Rating of Silver.