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JPMorgan Preferred and Inc Scrts I JPDIX

Quantitative rating as of
  • NAV / 1-Day Return 9.42  /  0.12 %
  • Total Assets 641.2 Mil
  • Adj. Expense Ratio
    0.590%
  • Expense Ratio 0.600%
  • Distribution Fee Level Low
  • Share Class Type Institutional
  • Category Preferred Stock
  • Credit Quality / Interest Rate Sensitivity
  • Min. Initial Investment 1,000,000
  • Status Open
  • TTM Yield
  • Effective Duration
unlocked

Morningstar’s Analysis JPDIX

Quantitative rating as of .

The Morningstar Quantitative Rating for funds is analogous to the rating our analyst might assign to the fund if they covered it.

Our analysts assign Bronze ratings to strategies they’re confident will outperform a relevant index, or most peers, over a market cycle.

Summary

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Decreased confidence in JPMorgan Preferred and Inc Scrts I's prospects relative to its Morningstar Category peers leads to a downgrade in this strategy's Morningstar Quantitative Rating to Bronze from Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the second-cheapest fee quintile among peers.

The management team's considerable industry experience drives an Above Average People Pillar rating for the strategy. The strategy belongs to a strong asset-management firm that earns an Above Average Parent Pillar rating. The firm, for example, has had a competitive lineup success ratio and overall affordable fees.

Process

| Above Average |

Morningstar's style-agnostic evaluation of this fund's process seeks to understand whether the strategy has a performance objective and sensible, clearly defined, repeatable execution. JPMorgan Preferred and Inc Scrts Fd earns an Above Average Process Pillar rating. The investment strategy as stated in the fund's prospectus is as follows:

The investment seeks to provide a high level of current income and total return. The fund invests at least 80% of its assets in preferred and debt securities issued by U.S. and non-U.S. issuers and obligors, including traditional preferred securities, hybrid preferred securities that have investment and economic characteristics of both preferred stock and debt securities, floating rate preferred securities, corporate debt securities, convertible securities, CoCos, and and securities of other open-end or ETFs that invest primarily in preferred and/or debt securities.

People

| Above Average |

Even with managers' lack of personal investments, the team managing JPMorgan Preferred and Inc Scrts Fd stands out with an experienced corps of managers. This strength bolsters the strategy's Above Average People Pillar rating. The team is backed by Lisa Coleman, the longest-tenured manager on the strategy, who provides over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.4 stars, demonstrating encouraging risk-adjusted performance. Although the team is small, it is a solid supporting cast. Together, the three listed managers boast more than an average of 16 years of portfolio management experience. None of the portfolio managers here invests in this fund. This hurts the rating because it suggests the team has little confidence the fund can deliver for investors, and that the alignment of managers' interests with those of the strategy's investors could be far better than it is.

Parent

| Above Average |

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.

Performance

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This strategy is young, incepted on March 31, 2022, but so far has had an underwhelming start. However, with such a narrow time frame, it would be misleading to make a sweeping conclusion. Since then, the fund's Institutional share class has lost 8.2%, compared with the category benchmark's, ICE BofA Core Fixed Rate Preferred Securities Index’s, 6.7% loss for the same period. And during that time, it mirrored its average peer's return.

Price

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It is critical to evaluate expenses, as they are subtracted directly out of returns. This share class is within the second-cheapest quintile of its Morningstar Category. Its competitive fee, considered jointly with the fund’s People, Process, and Parent Pillars, suggests that this share class has the ability to deliver positive alpha versus its category benchmark, leading to its Morningstar Quantitative Rating of Bronze.