JPMorgan U.S. Large Cap Core Plus Fund - A - J.P. Morgan Asset Management
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JPMORGAN U.S. LARGE CAP CORE PLUS FUND

Broaden your opportunity set.

Through its 130/30 strategy, the U.S. Large Cap Core Plus Fund aims to maximize portfolio managers’ insights and provide investors with greater return potential than traditional long-only strategies.

Fund Story  

Key Points

Expertise
  • Experienced portfolio managers benefit from fundamental insights of 24 career research analysts.
Portfolio
  • Well-defined process which uses research insights to find opportunities in both attractive and unattractive stocks through long and short positions.
Success
  • Top-decile performance and information ratio and top-quintile batting average over the five and 10-year periods.1
EXCESS GROWTH OF $100,000 OVER 10 YEARS

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



 

1Morningstar; as of 6/30/17. Ranked: 1-yr. (139/1392), 3-yrs. (480/1223), 5-yrs. (75/1080) and 10-yrs. (30/802). Information ratio, the excess return vs. the benchmark divided by tracking error. Ranked: 1-yr. (124/1354), 3-yrs. (250/1281), 5-yrs. (84/1205) and 10-yrs. (30/1063). Batting average measures manager’s ability to meet or beat the market consistently, calculated by dividing the number of quarters/months when the manager beats/matches the index by the total number of quarters/months in the period. Ranked: 1-yr. (179/1354), 3-yrs. (164/1281), 5-yrs. (185/1205) and 10-yrs. (47/1063).

Chart source: Morningstar, J.P. Morgan Asset Management; as of 6/30/17. US OE Large Blend category. I Shares. Other share classes may have higher expenses, which would result in lower returns. 10-year growth with dividends and capital gains reinvested. There ‘s no direct correlation between a hypothetical investment and anticipated performance of the Fund. The $0 value for benchmark growth is the baseline for the over and under comparison.

Performance

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Commentary

As of June 30, 2017

Quarter in review
  • The JPMorgan U.S. Large Cap Core Plus Fund (I Class Shares) underperformed its benchmark, the S&P 500 Index, for the quarter ended June 30, 2017.
  • In consumer discretionary, our overweight position in Walt Disney Co. (1.8% portfolio weighting) detracted from performance after fiscal second-quarter earnings showed worse-than-expected subscriber declines and advertising revenue. Despite this volatility, we remain positive, anticipating that results in the cable networks segment should improve as online video offerings, such as YouTube TV and Hulu Live, help offset traditional subscriber declines and as ESPN’s distribution renewals start later this year.
  • Also in the consumer discretionary sector, our overweight in O'Reilly Automotive, Inc. (0.9% portfolio weighting) underperformed as its multiple contracted following increased skepticism around the justification for the premium multiple the company has historically carried amid the recent slow-down in the auto parts industry. We believe we are at a trough in terms of trends and remain attracted to O’Reilly’s positioning within the Do It For Me (DIFM) segment of the market.
  • In financials, an overweight in Citigroup, Inc. (2.4% portfolio weighting) added value as investors cheered the prospects of a stronger capital return plan and interpreted the Treasury Department’s recent white paper to indicate a greater likelihood for a more favorable regulatory landscape for financials. We remain attracted to the company’s free cash flow and net payout yield profiles.
  • Within health care, our overweight in UnitedHealth Group, Inc. (2.8% portfolio weighting) contributed following a broad-based earnings beat due to better-than-expected revenues and medical loss Ratios, and a tax rate that came in below expectations. We continue to believe UnitedHealth can sustain differentiated double-digit earnings per share growth due to the positioning of its quality health plan assets and the high-growth, sophisticated tools offered by its Optum unit.
Looking ahead
  • We expect the momentum experienced during the post-election period to largely continue throughout the remainder of 2017. The continuation of the earnings environment experienced during the second quarter should be largely supportive of our positioning. The broad-based growth it yielded is likely to offer a tailwind for our constructive outlook on the U.S. equity market, while the inter-sector dislocations that emerged this quarter should offer added potential for alpha generation.
  • Our core sector tilts have remained constant, as we are retaining our favorable view of big banks and brokers, health services and systems and insurance, and our negative stance on consumer staples, real estate investment trusts and utilities.
  • The Fund continues to be a broadly diversified portfolio of U.S. large-cap stocks, seeking to add value through bottom-up stock selection as the primary driver of excess returns.

The holdings listed above 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.

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 1.25% for A Shares, 1.75% for C Shares, 0.99% for I Shares, 1.50% for R2 Shares and 0.80% for R5 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 10/31/2017 for A Shares, 10/31/2017 for C Shares, 10/31/2017 for I Shares, 10/31/2017 for R2 Shares and 10/31/2017 for R5 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.

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 S&P 500 Index is an unmanaged index generally representative of the performance of large companies in the U.S. stock market. Index levels are in total return USD.

The performance of the Lipper Alternative Active Extension Funds Average includes expenses associated with a mutual fund, such as investment management fees. These expenses are not identical to the expenses charged by the Fund. An individual cannot invest directly in an Index.

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.

There is no guarantee that the use of long and short positions will succeed in limiting an investment's exposure to domestic stock market movements, capitalization, sector-swings or other risk factors. Investments in a portfolio involved in long and short selling may have higher portfolio turnover rates. This will likely result in additional tax consequences. Short selling involves certain risks, including additional costs associated with covering short positions and a possibility of unlimited loss on certain short sale positions.
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.

Beta measures a fund's volatility in comparison to the market as a whole. A beta of 1.00 indicates a fund has been exactly as volatile as the market.

Sharpe ratio measures the fund's excess return compared to a risk-free investment. The higher the Sharpe ratio, the better the returns relative to the risk taken.

Tracking Error: The active risk of the portfolio, which determines the annualized standard deviation of the excess returns between the portfolio and the benchmark.

Alpha: The relationship between the performance of the Fund and its beta over a three-year period of time.

Standard deviation/Volatility: A statistical measure of the degree to which the Fund's returns have varied from its historical average. The higher the standard deviation, the wider the range of returns from its average and the greater the historical volatility. The standard deviation is calculated over a 36-month period based on Fund's monthly returns. The standard deviation shown is based on the Fund's Class A Shares or the oldest share class, where Class A Shares are not available.

R2: The percentage of a Fund's movements that result from movements in the index ranging from 0 to 100. A Fund with an R2 of 100 means that 100 percent of the Fund's movement can completely be explained by movements in the Fund's external index benchmark.

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

Risk measures are calculated based upon the Funds' broad-based index as stated in the prospectus.