Morningstar's style-agnostic investment process evaluation looks for strategies with a philosophy distinctive enough to generate standout results in the future. JPMorgan Small Cap Blend Fund earns an Above Average Process Pillar rating.
This strategy skews toward smaller, more undervalued companies than its average peer in the Small Growth Morningstar Category. Examining additional factor exposure, this strategy tilts toward low-quality stocks or the shares of companies with more financial leverage and lower profitability. These are not defensive holdings. The strategy is also historically less exposed to the factor compared with Morningstar Category peers. This strategy is also exposed to liquid stocks. More liquid assets lend themselves to more flexible exit strategies without price changes and tend to be a ballast during market selloffs. For example, if the portfolio faces successive redemptions in a short time, it will be less likely to shoulder a significant loss. But when compared with category peers, the strategy historically has had less exposure. Additionally, this strategy leans toward low-yield stocks, holding fewer companies with high dividend or buyback yields. Most often, returning capital to shareholders is not a priority for businesses with low or no yields because they are reinvesting in their operations and plans. Such companies can pay off with strong returns should the selected companies deliver on growth projections, but they're also riskier. However, the portfolio has less 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 is overweight in financial services and real estate relative to the average peer in its category by 7.5 and 4.5 percentage points in terms of assets, respectively. The sectors with low exposure compared to their category peers are technology and healthcare, underweight the average by 8.2 and 7.2 percentage points of assets, respectively. The portfolio is positioned across 237 holdings and is diversified among those holdings. In its most recent portfolio, 10.2% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category’s 26.5% average. And finally, in terms of portfolio turnover, this fund trades less frequently than the category’s average, potentially limiting costs to investors.