JPMorgan SmartRetirement® 2060 Fund has several promising attributes that may appeal to sustainability-focused investors.
This fund has relatively low exposure to ESG risk compared with its peers in the Target Date category, earning it the second highest Morningstar Sustainability Rating of 4 globes. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.
JPMorgan SmartRetirement® 2060 Fund has a Carbon Risk Score of 8.66, indicating portfolio companies face low carbon-related risks in the transition to a low-carbon economy. Currently, the fund has 8.47% involvement in fossil fuels, which compares favorably with 8.48% for its average category peer. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas.
One potential issue for a sustainability-focused investor is that JPMorgan SmartRetirement® 2060 Fund doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes.
The fund has a modest level of exposure (7.91%) to companies with high or severe controversies. Companies with high or severe controversies are involved in incidents such as corruption, employee abuses, environmental incidents, and corporate scandals that pose serious business risks to the company.