JPMorgan High Yield Fund - C - J.P. Morgan Asset Management
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JPMORGAN HIGH YIELD FUND

Income potential with high yield.

Driven by macro insights and bottom-up fundamental credit research, the High Yield Fund aims to deliver greater income and return potential than core bond holdings, with lower risk than stocks.

Performance

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Commentary

As of September 30, 2017

Quarter in review
  • The JPMorgan High Yield Fund (I Class Shares) outperformed the benchmark, the Bloomberg Barclays US High Yield 2% Issuer Capped Index, for the quarter ended September 30, 2017.
  • The Fund’s security selection in utilities, mostly from a single post-reorganization equity, added to performance.
  • The Fund also benefitted from an underweight position and good security selection in the retail sector, where we avoided names with the most challenging fundamentals.
  • The Fund’s overweight positioning in supermarkets detracted from performance. Amazon’s entry into the space via Whole Foods has cast a shadow over the entire sector.
  • The Fund’s allocation to leveraged loans also hurt relative performance during the quarter, when lower-volatility loans did not benefit as much as high-yield bonds from the bull market.
Looking ahead
  • Following a remarkable 20-month run in high yield, spreads are at three-year tights. Investors have reaped the rewards of the rally in high yield on the back of commodity prices finding their footing, sharply falling default rates and a stable macro growth picture. Given that we see no late-stage warning signals in the credit markets or economic data, we expect high yield to be a good carry trade in the medium term.
  • We anticipate sector-specific pressures to be the main drag on returns over the next 12 months, but for favorable default rates and fundamentals among high-yield issuers to prevent material spread-widening. We remain positive on high yield as an extended sector that can continue to provide diversification and yield to a variety of portfolios.

Fees and Minimums

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Portfolio

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Management

Fund Managers

Documents

Disclaimer

1Please refer to the prospectus for additional information about cut-off times.

Total return assumes reinvestment of income.

The Fund's adviser and/or its affiliates have contractually agreed to waive fees and/or reimburse expenses to the extent Total Annual Fund Operating Expenses (excluding acquired fund fees and expenses, dividend and interest expenses related to short sales, interest, taxes, expenses related to litigation and potential litigation and extraordinary expenses) exceed of the average daily net assets. The Fund may invest in one or more money market funds advised by the adviser or its affiliates (affiliated money market funds). The Fund's adviser has contractually agreed to waive fees and/or reimburse expenses in an amount sufficient to offset the fees and expenses of the affiliated money market funds incurred by the Fund because of the Fund's investment in such money market funds. This waiver is in effect through , at which time the adviser and/or its affiliates will determine whether to renew or revise it. The difference between net and gross fees includes all applicable fee waivers and expense reimbursements.

The quoted performance of the Fund includes performance of a predecessor fund/share class prior to the Fund's commencement of operations. Please refer to the current prospectus for further information.

Mutual funds have fees that reduce their performance: indexes do not. You cannot invest directly in an index.

The Bloomberg Barclays U.S. Corporate High Yield - 2% Issuer Capped Index is comprised of fixed rate, non-investment grade debt securities that are dollar denominated and non-convertible. The index limits the maximum exposure to any one issuer to 2%.

The performance of the Lipper High Yield Bond 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 figures (for the fund and any index quoted) assume payment of fees and reinvestment of dividends (after the highest applicable foreign withholding tax) and distributions. Without fee waivers, fund returns would have been lower. Due to rounding, some values may not total 100%.

©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.
The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10- year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.Rankings do not take sales loads into account.
The following risks could cause the fund to lose money or perform more poorly than other investments. For more complete risk information, see the prospectus.

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.

Securities rated below investment grade are considered "high-yield," "non-investment grade," "below investment-grade," or "junk bonds." They generally are rated in the fifth or lower rating categories of Standard & Poor's and Moody's Investors Service. Although they can provide higher yields than higher rated securities, they can carry greater risk.

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.
Total return assumes reinvestment of income.

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.

Yield to Maturity: The rate of return anticipated on a bond if it is held until the maturity date.