JPMorgan Short Duration Core Plus R6 JSDRX

A strong management team and sound investment process underpin JPMorgan Short Duration Core Plus R6's Morningstar Quantitative Rating of Silver. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.

The management team's considerable industry experience drives an Above Average People Pillar rating for the strategy. The strategy's sensible investment philosophy earns an Above Average Process Pillar rating. The portfolio has underweighted AA rated bonds and has an overweight in debt with five- to seven-year maturities compared with category peers. 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.

Morningstar's evaluation of this fund's process aims to determine whether it has been applied consistently over time, as demonstrated by the portfolio's composition, its suitability for different types of investors, and expectations for performance in various market conditions, assuming the process is adhered to. JPMorgan Short Duration Core Plus Fund earns an Above Average Process Pillar rating.

Compared with other funds in the Short-term Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity. Opening the analysis to additional factors, the portfolio, over time, has displayed three biases whether toward or away from certain fixed-income instruments. First, managers have shown a consistent underweight position on AA rated bonds compared to peers. Additionally, there's been a bias toward debt with five- to seven-year maturities. And finally, the fund leans toward securitized debt.

This strategy has a 2.5% 12-month yield, higher than its average peer's 2.0%. Plus, its 30-day SEC yield (a measure similar to yield-to-maturity) sits at 4.6%. Typically, higher yields come at the cost of higher credit risk. The portfolio favors lower-quality credit with an average of BBB, compared with the typical peer's A and 11% of the fund's assets are rated non-investment grade, compared to its peers' 3%. Higher credit risk strategies tend to pay off most when markets are hot.

JPMorgan Short Duration Core Plus Fund benefits from an experienced corps of managers and sizable personal investments from managers, warranting an Above Average People Pillar rating. Cary J. Fitzgerald, the longest-tenured manager on the strategy, provides strong guidance, offering over 25 years of portfolio management experience. The average Morningstar Rating of the strategies they currently manage is 3.7 stars, demonstrating encouraging risk-adjusted performance. Despite having a small team, the two listed managers boast over 25 years of portfolio management experience. As a team, they manage two investment vehicles together, with solid long-term prospects. The strategies average a Bronze asset-weighted combined Morningstar Analyst and Quantitative Rating, indicating a position to deliver positive alpha in aggregate. The highest personal investment in this offering by any of its managers is at least $1 million. We view an investment of this size positively, as it is large enough to help align managers' interests with those of the strategy's investors.

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.

This strategy’s Retirement share class' long-term performance is mixed depending on the yardstick used. It has provided similar returns compared with peers, but better returns compared with the category benchmark. Over the past nine-year period, this share class' 2.2% return was about even with the average peer's performance. However, it cleared the hurdle of beating the category index, Bloomberg Barclays U.S. Aggregate Government/Credit 1-3 Year Index, where it outperformed by an annualized 1.3 percentage points over the same period.

When adjusting for risk, this fund is competitive. The share class outstripped the index with a higher Sharpe ratio, a measure of risk-adjusted return, over the trailing five-year period. However, these strong risk-adjusted results have come with a cost--a rockier ride for investors. This strategy took on elevated risk, as measured by a higher standard deviation, 3.2%, to the benchmark's 1.5%. Finally, the share class proved itself effective by generating positive alpha, over the same five-year period, against the category group index: a benchmark that encapsulates the performance of the broader asset class.

By minimizing expenses, investors can maximize their expected returns. This share class sits in the cheapest quintile of its Morningstar Category. Its competitive fee, taken together with the fund’s People, Process, and Parent Pillars, suggests that this share class has the ability to deliver positive alpha against its category benchmark, leading to its Morningstar Quantitative Rating of Silver.