A strong management team and sound investment process underpin JPMorgan Sustainable Municipal Inc ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the least expensive fee quintile among peers.  

 The strategy underwent an entire portfolio management team change less than a year ago, but confidence in the strategy's new leadership drives an Above Average People Pillar rating. The strategy's investment approach stands out and earns an Above Average Process Pillar rating.  The strategy's parent organization earns the firm an Above Average Parent Pillar rating, and this rating is inherited from vehicles belonging to the same branding entity and is indirectly assigned by an analyst.

Analyst Rating

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. JPMorgan Sustainable Municipal Inc ETF earns an Above Average Process Pillar rating.    The main driver of the rating is the parent firm's five-year risk-adjusted success ratio of 56%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent firm's superior risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 3.3 stars, also contributes to the process. Lastly, the process is limited by being an actively managed strategy. Historical data, like Morningstar's Active/Passive Barometer, finds that actively managed funds have generally underperformed their passive counterparts, especially over longer time horizons.

 Compared with other funds in the Muni National Interm Morningstar Category, this fund takes on significantly higher credit risk. But in terms of long-term interest-rate sensitivity, it hews closely to its average peer over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Compared with the category average, the managers have been significantly underweight A rated bonds in recent years. In the latest month, the strategy has also relatively underweighted A rated bonds compared with Morningstar Category peers. Additionally, the fund has exhibited a notable sector bias towards cash over the past few years. Compared with category peers, the strategy had more exposure to cash in the most recent month. Finally, during the past few years, the fund leaned towards debt with 10- to 15-year maturities. In this month, the strategy also leaned more towards debt with 10- to 15-year maturities compared with its peers.

 This strategy has a 3.2% 12-month yield, higher than its average peer's 2.8%. In addition, it has a 3.7% 30-day SEC yield (a standardized, point-in-time estimate of the fund’s future income return). While a higher yield may deliver more income, it also tends to indicate higher credit risk. The portfolio has a lower average credit rating of BBB, compared with the typical peers' A and 6% of the fund's assets are rated non-investment-grade, compared to its peers' 1%. Lower quality bonds have higher yields but come with more risk.

Above Average

Process

The fund earns an Above Average People Pillar rating. Although this strategy was incepted on February 1993, its listed management team joined within the past three years. Therefore, the fund’s historical data is not applicable to the current team.

 Note: The People Pillar rating is indirectly assigned by an analyst. At least one of the managers on this fund manages a different product rated by an analyst. The analyst-assigned People Pillar rating(s) for these managers are combined with algorithmic scores for any non-covered managers on a tenure-weighted basis.

People

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 global cohorts and diverse 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.

Parent

JPMorgan Sustainable Municipal Income ETF

JMSI is an actively managed fund that primarily invests in sustainable municipal bonds exempt from federal income tax. The portfolio has an average weighted maturity of 3 to 15 years.

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News for JPMorgan Sustainable Municipal Income ETF ETF (JMSI)