Why We Upgraded Fidelity, Pimco, and J.P. Morgan

We rate fund companies on the same scale as the Process and People Pillars: Low, Below Average, Average, Above Average, or High. With the largest fund companies, we typically visit in person for a couple of days, host some visits from the fund company, hold some Zoom meetings, and score or even conduct hundreds of manager interviews over the course of a year.

Rolling up all that information about companies managing more than a trillion dollars is not easy. There are always some weak points and strong points: areas that are improving and others in decline. We do our best to sum all that up, but it’s not easy. This year, we have changed the Parent ratings for a few of the big ones. We raised Fidelity to High, took T. Rowe Price down a notch to Above Average, boosted Pimco to High, and upgraded J.P. Morgan to High.

To understand why, let’s take a look at some data on managers. We calculate firm asset-weighted manager tenure, in which larger funds’ manager tenures are weighted higher than those of smaller funds. We also calculate manager retention rates, figuring out what percentage of managers leave on an annual basis over the trailing five years.

For manager tenure, Pimco clocked in at 14.0 years, Fidelity was 13.6 years, J.P. Morgan was 12.0 years, and T. Rowe was well behind at 8.1. For manager retention rate, J.P. Morgan was at the top with 96%, Fidelity next at 93%, and then Pimco and T. Rowe were tied at 92%.

5-Year Firm Manager Retention Rate

Big funds like T. Rowe Price New Horizons PRNHX and T. Rowe Price Growth Stock PRGFX have had recent manager changes.

On the performance front, Fidelity boasts the best average Morningstar Rating at 3.44 stars, T. Rowe and Pimco are next at 3.36, followed by J.P. Morgan at 3.08. Another angle on performance is the success ratio, which calculates the percentage of funds that survived and outperformed on a risk-adjusted basis over a given time frame. For T. Rowe Price, the five-year figure is a respectable 40%. For J.P. Morgan, the figure is 47%; for Pimco, it is 60%; and for Fidelity, it is 61%.

5-Year Firm Risk-Adjusted Success Ratio

For me, the best gauges are our Process and People ratings on individual funds because these ratings are forward-looking and reflect a deep dive into each fund. On an absolute basis, T. Rowe Price looks good, but the trend has been decidedly to the downside, while our other firms have enjoyed more upgrades than downgrades.

Over the past three years, Fidelity has had 10 People upgrades to four downgrades and 14 Process upgrades to one downgrade. Pimco had 10 People upgrades and two downgrades. The firm saw five Process upgrades to one downgrade. J.P. Morgan had 11 People upgrades and just three downgrades. On Process, J.P. Morgan had eight upgrades and three downgrades. As you can see, all three promoted firms were strongly on the upswing.

However, the trend isn’t great at T. Rowe Price. The firm has seen 20 People downgrades in the past three years to just five upgrades. The firm saw 11 Process downgrades and six upgrades. However, those pillars are still quite positive. Thirty-nine of the 53 rated strategies are Above Average or High for Process. And 37 of the 53 carry an Above Average or High People rating.

What’s Gone Wrong at T. Rowe Price

Last year, T. Rowe Price moved into some very nice offices in Baltimore that will likely help the firm to retain and attract talented investors. That’s good news, as we are concerned about growing departures of analysts and managers.

One side of the building is for T. Rowe Price Associates, and another is for T. Rowe Price Investment Management. A few years ago, T. Rowe split into two largely autonomous groups to manage their growth. Fund companies face various limits on how much they can own in a company.

If a company or person owns 10% of a company, then they have to file with the Securities and Exchange Commission for each trade they make—a burden for a fund company. By splitting the company into two, that effectively raises the figure to 20%. There are other practical challenges, too, such as stocks moving against you each time you trade if you are running a lot of money, as well as the challenge of getting out when you want to sell. To count as separate entities for these rules, the two units have to be walled off. Managers and analysts in one unit can’t discuss investments with managers and analysts in the other. So, for this to work, a firm has to build extensive redundant resources. Capital Group is split into three.

Unfortunately, things haven’t gone well. T. Rowe Price Investment Management includes most of T. Rowe’s small-cap funds plus T. Rowe Price Capital Appreciation PRWCX, which is being run by David Giroux from his home in the Isle of Man. The performance of the Investment Management group’s funds has been poor at the small-cap funds and middling at T. Rowe Price Capital Appreciation since the split.

We can’t say how much of that slump is attributable to the split, but when managers lose access to some great analysts, the outcome can be bad.

In addition, T. Rowe has had some struggles on the fixed-income side. T. Rowe Price New Income PRCIX has been a long-running disappointment that the firm has struggled to fix. The fund plays a prominent role in the firm’s target-date and some other allocation funds, making it a key sore point.

What’s Gone Right at Fidelity

Fidelity brings resources and determination to every problem. It entered this century with a model that worked brilliantly in the 1990s but was a poor fit for the future. While it had strengths like a robust brokerage and 401(k) business, its active equity was ill-suited to compete, given its dependence on solo managers, relatively young analyst support, and fund bloat. But the firm made huge investments to correct those issues and gradually worked through its challenges.

Today, the firm is strong in equity, bonds, and allocation. It’s a bit thin on the value side of equity but still pretty good. Artificial intelligence will present new obstacles, but I’m confident the firm will at least bring sufficient resources to bear on the issue that it will have a good chance of succeeding.

What’s Gone Right at J.P. Morgan

J.P. Morgan delivers consistency. Funds stick to their approach even as managers change and market favor changes direction. Most of its funds have three to five managers. That ensures continuity in strategy and performance. The firm has incrementally improved the quality of management and processes.

“Over the past 10 years, the firm has developed robust proprietary technology with advanced analytics and broad buy-in from investment analysts, portfolio traders, and portfolio managers, all of whom have easy access to the platform,” wrote Morningstar principal Alyssa Stankiewicz in our latest Parent report on the shop. “The firm also stands apart for its demonstrated commitment to clients. In the early 2000s, J.P. Morgan began pivoting its engagement with financial advisors to adopt a more consultative approach, supported by its sought-after Guide to the Markets research series that focuses on investor education, not product pitches. This perspective can help clients stay the course, supporting positive investor outcomes.”

What’s Gone Right at Pimco

I recently profiled the state of Pimco Total Return PTTRX (I own this fund) since Bill Gross’ exit in 2014. Initially, the managers brought together under challenging circumstances were treading water as they sorted out how to work together and how to pursue this fund’s bold pursuit of total returns without excessive risk. But under the next group of managers, the fund has found its footing with savvy risk-taking that produced good returns without missteps.

That’s a fair picture of what’s going on firmwide, as increased depth of investing talent has allowed funds to make the most of the firm’s considerable competitive advantages. The firm’s strengths show up in nearly every strategy, though Pimco High Yield PHDAX rates only Average for People and Above Average for Process.

Upgrades and Downgrades

Few Words, Big Impact

In our fund reports, the Parent text only takes up a few paragraphs, but there’s a lot of research behind it, and it informs the rest of the report as well. The giant fund companies are rarely all of the same quality, so you still need to research each fund. But the High Parent-rated firms earn top scores for stewardship and quality of management. You’re going to find strong investments at these firms more often than elsewhere.

This article first appeared in the July 2026 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.