JPMorgan Equity Income Fund - I - J.P. Morgan Asset Management


A conservative approach to equities pays dividends.

The Equity Income Fund focuses on high-quality U.S. companies with healthy and sustainable dividends, which seeks to provide lower volatility access to stock market growth.

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Key Points

  • Portfolio management team led by experienced equity income manager Clare Hart.
  • Invests in high-quality U.S. companies with attractive valuations and healthy dividends.
  • Top-quintile performance vs. peers over the 3-yr. period and top-decile performance over the 10-yr. period.1
EXCESS GROWTH OF $100,000 over 10 years

Compared to benchmark and category average, in thousands (difference vs. benchmark)

Chart source: Morningstar, J.P. Morgan Asset Management; as of 9/30/17. Morningstar Large Value Category. Returns for I Share class. Other share classes may have higher expenses, which would result in lower returns. Ten-year growth with dividends and capital gains reinvested. There is no direct correlation between a hypothetical investment and the anticipated performance of the Fund. The $0 value for benchmark growth is the baseline for the over and under comparison.

1Source: Morningstar, Large Value Category. I Shares as of 9/30/17. Ranked: 1-yr. (571/1269), 3-yrs. (161/1108), 5-yrs. (251/962) and 10-yrs. (32/689).


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As of September 30, 2017

Quarter in review
  • The JPMorgan Equity Income Fund (I Class Shares) outperformed the benchmark, the Russell 1000 Value Index, for the quarter ended September 30, 2017.
  • Chevron Corp. (2.8% portfolio weighting) posted strong quarterly results thanks to management’s stellar execution. The company’s liquid natural gas projects are on track, its Permian position is the most valuable in the industry, and capital expenditures are under control. Going forward, we appreciate management’s strategy as they are looking to improve their capital expenditure efficiency, while maintaining a methodical approach to ramping up its Permian results.
  • ConocoPhillips (2.1% portfolio weighting) reported excellent quarterly results, with production at the high end of guidance. Additionally, management raised full-year production guidance while simultaneously reducing its capital expenditure outlook, which highlights efficiency improvements. We appreciate that ConocoPhillips has a differentiated strategy as management is focused on cash flow, returns, and growth on a per-share basis. In our view, ConocoPhillips’ balance sheet is in line with the peers, yet it offers a more attractive valuation and above-average sensitivity if oil prices rise from current levels.
  • Altria Group, Inc. (1.2% portfolio weighting) was the top detractor in the quarter amidst weakness related to the FDA’s announcement to increase regulation on nicotine levels in tobacco products. In our view, FDA action may actually be a positive for Altria as it will likely accelerate the shift to Reduced Risk Products (RRPs), where barriers to entry are higher and growth is more sustainable long term. Additionally, following the British American-Reynolds American merger earlier in the year, Altria is attractively positioned as the main pure play within domestic tobacco.
  • We’ve learned a great deal in the past year about how consumers choose to spend money and how they shop. Amazon’s open-ended expansion aspirations make retail unappealing and bring our current holdings under increased scrutiny. Consistent with this theme, we eliminated our position in L Brands (0.0% portfolio weighting). Despite having eliminated the position prior to the end of the quarter, the magnitude of the underperformance led it to be the second-largest, stock-specific performance detractor.
Looking ahead
  • The investment philosophy emphasizes investing in high-quality, conservative companies with relatively stable patterns of earnings.
  • Within financials, we see strength in our property-and-casualty insurance names heading into 2018. Interestingly, we are finding opportunities in the information technology sector, where names like Apple, Inc. (2.4% portfolio weighting) and Microsoft Corp. (2.2% portfolio weighting) provide sufficient yield and earnings power to meet our high-quality threshold. Conversely, as we look to navigate shifting consumer preferences, we’ve been reducing exposure to the consumer, given secular disruptions from Amazon. Additionally, given our total return approach, we remain underweight the bond proxies – consumer staples, utilities and real estate investment trusts – in light of lofty valuations.
  • We remain confident in our approach for the long term in buying quality companies with yield at reasonable valuations, and continue to find compelling opportunities going forward.

Fees and Minimums

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Fund Managers



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 1.04% for A Shares, 1.54% for C Shares, 0.79% for I Shares, 1.29% for R2 Shares, 1.04% for R3 Shares, 0.79% for R4 Shares, 0.59% for R5 Shares, 0.54% for R6 Shares and 1.04% for T Shares 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 10/31/2018 for A Shares, 10/31/2018 for C Shares, 10/31/2018 for I Shares, 10/31/2018 for R2 Shares, 10/31/2018 for R3 Shares, 10/31/2018 for R4 Shares, 10/31/2018 for R5 Shares, 10/31/2018 for R6 Shares and 10/31/2018 for T Shares, 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.

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

The Russell 1000 Value Index is an unmanaged index measuring the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

The performance of the Lipper Equity Income 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 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.

The currency for the calculation corresponds to the currency of the country for which the awards are calculated and relies on monthly data. Classification averages are calculated with all eligible share classes for each eligible classification. The calculation periods extend over 36, 60, and 120 months. For a detailed explanation please review the Lipper Leaders methodology document on
Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Users acknowledge that they have not relied upon any warranty, condition, guarantee, or representation made by Lipper. Any use of the data for analyzing, managing, or trading financial instruments is at the user's own risk. This is not an offer to buy or sell securities.

Effective November 22, 2017, the calendar year performance of the R2 share class, prior to the inception of the share class, was recalculated to take into consideration the expenses of the share class.

The prices of equity securities are sensitive to a wide range of factors, from economic to company-specific news, and can fluctuate rapidly and unpredictably, causing an investment to decrease in value.

There is no guarantee that companies will declare, continue to pay or increase dividends.
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.

P/E ratio: the number by which earnings per share is multiplied to estimate a stock's value.

P/B ratio: the relationship between a stock's price and the book value of that stock.

EPS: Total earnings divided by the number of shares outstanding.