Morningstar's evaluation of this fund's process aims to determine how repeatable, consistent, and reliable execution is, and whether management maintains competitive advantage. JPMorgan U.S. Applied Data Science Value earns an Above Average Process Pillar rating.
This strategy targets smaller plays than its peers’ average in the Large Value Morningstar Category. But in terms of style (value/growth) exposure, the strategy does not differ much. Looking at additional factor exposure, this strategy holds some stocks with low trading volume. Illiquid stocks tend to be more difficult and costly to sell quickly during market stress, which could affect returns if rapid redemptions, for example, force managers to sell at disadvantageous prices. However, compared with Morningstar Category peers historically, the strategy is more exposed to the factor. This strategy has also tilted toward low-volatility stocks, meaning those that have a lower standard deviation of returns. These companies have historically been a valuable ballast to steady portfolio returns during market downturns. But when compared with category peers, the strategy has historically had more exposure. Additionally, this strategy's holdings include more companies with high dividend or buyback yields. Stocks with high yield exposure tend to be more mature, stable businesses, though some offer high yields because their earnings and share prices have plunged. Extreme business or market conditions also can cause either kind of company to suspend or cut their payouts. And the portfolio has more exposure than its Morningstar Category peers. 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 has allocations in its top 2 sectors, industrials and healthcare, that are similar to the average portfolio in the category. The sectors with low exposure compared to their category peers are technology and consumer defensive, with technology underweighting the average portfolio by 4.1 percentage points of assets and consumer defensive similar to the average. The strategy owns 97 securities and is diversified among those holdings. In its most recent portfolio, 23.4% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 32.2%. And finally, in terms of portfolio turnover, this fund trades less frequently than the category’s average, potentially limiting costs to investors.