Why We Upgraded JPMorgan Income ETF

JPMorgan Income ETF’s JPIE experienced, specialized, and collaborative team earned it a People Pillar rating boost to High, which lifted its overall Morningstar Medalist Rating in December to Gold from Silver.

This team is among the multisector bond Morningstar Category’s best. Manager Andrew Norelli, who has more than two decades of industry experience, has anchored this strategy since its open-end sibling JPMorgan Income’s JMSIX mid-2014 inception. He has collaborated with managers Drew Headley and Tom Hauser, each of whom has more than three decades of experience, since 2017 and 2020, respectively. Headley’s securitized credit expertise and Hauser’s below-high-yield focus give this team its edge. Each manager, however, is well-versed in most bond market sectors, enabling them to invest where they see the best value. J.P. Morgan’s deep and capable analyst team, one of the industry’s largest, supports the managers.

The fund’s approach grants the managers wide discretion to implement their best ideas, drawing insights from global macroeconomic trends and sector specialists across the firm. J.P. Morgan’s quarterly macro view guides broad portfolio positioning, while daily collaboration among managers, sector specialists, researchers, and traders informs most investment decisions. The managers strive for diversification within higher-income areas, particularly securitized debt, which currently constitutes roughly two thirds of the portfolio.

Key Morningstar Metrics for JPMorgan Income ETF

Morningstar Medalist Rating: Gold

Process Pillar: Above Average

People Pillar: High

Parent Pillar: Above Average

The Artificial Intelligence Model Has Shown Its Capabilities

The compelling results of Vanguard Strategic Equity’s VSEQX proprietary models earned it a Process Pillar upgrade to Above Average and boosted the investor shares’ Medalist Rating to Gold from Silver.

Since joining from an outside firm more than four years ago, manager Cesar Orosco has revamped the models that Vanguard’s Quantitative Equity Group has long used to run this fund. Adding artificial intelligence to the fund’s strategy in February 2023 has been the most crucial change. The machine-learning AI engine runs alongside the fund’s traditional model, using the same six themes but adjusting dynamically and swiftly to shifting market conditions. As the AI-enhanced approach nears its two-year milestone, the fund’s performance has been solid across diverse market environments.

Key Morningstar Metrics for Vanguard Strategic Equity

Morningstar Medalist Rating: Gold

Process Pillar: Above Average

People Pillar: Above Average

Parent Pillar: High

An Impending Manager Departure

The upcoming retirement of one of Wasatch Small Cap Growth’s WAAEX key managers downgraded its People Pillar to Above Average from High, causing its investor shares' Medalist Rating to drop to Silver from Gold.

Manager J.B. Taylor will step off the fund in January 2025 and retire at the end of the year. His leadership, which began in 2016, was pivotal in refining the strategy by trimming holdings, refocusing on US small-cap stocks, and bringing on managers Ryan Snow and Ken Korngiebel, which improved the strategy’s performance. While Snow and Korngiebel each have nearly three decades of industry experience and can lean on Wasatch’s broader team for support, they now need to demonstrate they can lead the strategy without Taylor.

Key Morningstar Metrics for Wasatch Small Cap Growth

Morningstar Medalist Rating: Silver

Process Pillar: High

People Pillar: Above Average

Parent Pillar: Above Average