JPMORGAN CORE BOND FUND
Quality at the Core.
A value-driven approach that emphasizes intermediate bonds of the highest quality, the Core Bond Fund serves as a foundation to investors seeking a well-diversified portfolio.
- Portfolio manager Barb Miller and team have delivered consistently higher risk-adjusted returns with meaningfully lower volatility vs. benchmark and peers.
- Uses bottom-up security selection to construct a portfolio of high-quality U.S. investment grade bonds.
- Fund’s negative correlation to equities is lower than 95% of peers, making it an effective diversifier
- Portfolio has provided stability with a track record of consistent returns in challenging markets (+4% in ‘08)
10-YEAR RISK-ADJUSTED RETURNS AND VOLATILITY
Chart source: Morningstar as of 12/31/16. Benchmark:Bloomberg Barclays U.S. Aggregate Index. Sharpe ratio is a measurement of a fund’s returns relative to its risks. Higher numbers for risk-adjusted returns are better.
Fees and Minimums
Management and Commentary
Quarter in review:
- The JPMorgan Core Bond Fund (Select Class Shares) underperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Index, for the quarter ended December 31, 2016.
- The Fund’s underweight to duration and specifically to the most volatile 30-year portion of the curve was a tailwind as rates rose. Five-, 10- and 30-year bellwether Treasuries returned -3.34%, -6.81% and -13.75% in the fourth quarter.
- Security selection within mortgages was a positive driver of returns. The duration of benchmark mortgages extended from 2.50 years to 4.61 years as yields increased, driving prices down. Our portfolio of mortgages with less prepayment and extension risk extended only slightly and outperformed.
- Corporate bonds outperformed Treasuries of the same duration by a larger margin than other broad investment-grade sectors; therefore, our underweight to corporate credit was a headwind.
- Mortgage comprised the only broad sector in the benchmark to underperform Treasuries of the same duration. Our overweight to the mortgage sector was a headwind in the fourth quarter even though our security selection was additive.
- We believe that global growth and U.S. rates are both poised to move higher, aided by a shift from monetary policy to fiscal policy.
- Sub-trend growth remains a possibility if the U.S. Congress fails to deliver stimulus.
- We are looking to add paper with stable cash flows and attractive convexity profiles within the structured markets. We have found value in longer-duration agency commercial mortgage-backed securities as well as in shorter-duration consumer credit securities.
- We plan to take advantage of new issue concessions in the credit market when opportunities present themselves. Financials is an area where we have found value given the new economic and monetary backdrop.
- We expect to maintain a slightly shorter duration than the benchmark with a marginal overweight to the “belly” of the curve.
- Uncertified Portfolio Holdings – Core Bond Fund
- Monthly Fund Update: Core Bond Fund
- Quarterly Product Guide
- 4Q2016 Taxable Mutual Fund Commentary
- Tapping into proven success
- Income/rising rate blend strategy
- Supplemental Data Sheet - Core Bond Fund
- Sales Charge / Dealer Concession Schedule
- 2016 JPMorgan Funds Capital Gains Distribution
- Quarterly Certified Holdings - JPMorgan Core Bond Fund
Total return assumes reinvestment of income.
Mutual funds have fees that reduce their performance: indexes do not. You cannot invest directly in an index.
The Bloomberg Barclays U.S. Aggregate Index is an unmanaged index representing SEC-registered taxable and dollar denominated securities. It covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through, and asset-backed securities.
The performance of the Lipper Core Bond Funds Index includes expenses associated with a mutual fund, such as investment management fees. These expenses are not identical to the expenses charged by the Fund.
Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges, where applicable. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees and/or reimbursement of certain expenses for certain periods since the inception date. If fees had not been waived and/or certain expenses were not reimbursed, performance would have been less favorable.
Â©2017, American Bankers Association, CUSIP Database provided by the Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. All rights reserved.
Investments in bonds and other debt securities will change in value based on changes in interest rates. If rates rise, the value of these investments generally drops.
Investments in derivatives may be riskier than other types of investments. They may be more sensitive to changes in economic or market conditions than other types of investments. Many derivatives create leverage, which could lead to greater volatility and losses that significantly exceed the original investment.
The value of investments in mortgage-related and asset-backed securities will be influenced by the factors affecting the housing market and the assets underlying such securities. The securities may decline in value, face valuation difficulties, become more volatile and/or become illiquid. They are also subject to prepayment risk, which occurs when mortgage holders refinance or otherwise repay their loans sooner than expected, creating an early return of principal to holders of the loans.
The Fund could experience a loss and its liquidity may be negatively impacted when selling securities to meet redemption requests by shareholders. The risk of loss increases if the redemption requests are unusually large or frequent or occur in times of overall market turmoil or declining prices. Similarly, large purchases of Fund shares may adversely affect the Fund's performance to the extent that the Fund is delayed in investing new cash and is required to maintain a larger cash position than it ordinarily would.
The top 10 holdings listed reflect only the Fund's long-term investments. Short-term investments are excluded. Holdings are subject to change. The holdings listed should not be considered recommendations to purchase or sell a particular security. Each individual security is calculated as a percentage of the aggregate market value of the securities held in the Fund and does not include the use of derivative positions, where applicable.
Duration: Measures price sensitivity of fixed income securities to interest rate changes.
Average Life: The length of time the principal of a debt issue is expected to be outstanding.