JPMorgan Equity Income Fund Class I HLIEX

JPMorgan Equity Income (including the JPMorgan Equity Income mutual fund, the JPM US Equity Income separate account, and various UK-domiciled subaccounts) has experienced managers who have prudently adjusted its long-standing approach.

After watching the pool of quality dividend-payers shrink for years, portfolio managers Andrew Brandon and David Silberman spoke to key stakeholders for more than a year about dropping the approach’s 2% dividend threshold. They did so in October 2025 and added a handful of lower dividend-payers. Then word broke that the prospectus benchmark Russell 1000 Value’s rebalancing in June 2026 would be historically tumultuous and make Amazon, which pays no dividend, the index’s top position at roughly 5%. Forced to choose between underweighting that stock by a huge amount and dropping the dividend requirement for up to 20% of the portfolio, they begrudgingly chose the latter. They made Amazon the strategy’s top position, and as of June 2026, it was the only holding that didn’t pay a dividend.

The market’s overall profile is driving dividend-oriented investors to be supple rather than rigid. For 20-plus years, this strategy required a dividend as a sign of a holding’s financial discipline and future prospects. But the core of the philosophy was never about yield: Rather, the managers believe that a diversified portfolio of solid businesses purchased at low prices will outperform over the long term. So, actually, a firm's durable earnings and capital allocation patterns have long mattered more than dividend levels. Brandon and Silberman sensibly made the tweak with pragmatic caution, not optimistic desire.

They took charge here in fall 2024 but have decades of experience, mostly at J.P. Morgan Asset Management. They’ve been portfolio managers here since 2019, and Brandon has been on this team since 2012. They were longtime lead manager Clare Hart’s chosen successors and have managed the portfolio reasonably using the same basic approach and mindset that dates to 2004. They have solid backing, with dedicated analysts Tony Lee, Lerone Vincent, and Laura Huang, plus the firm’s large central analyst team.

Over the current managers’ nearly two-year stint through August 2026, its US mutual fund institutional shares’ gains have matched the typical large-value Morningstar Category peers’ and have topped similar, actively managed equity-income strategies. From its 2004 starting point, its outperformance over category peers and its benchmark is impressive, especially in bear markets. It remains worthy.

The managers have slightly tweaked this disciplined approach, and it maintains its High rating.

Experienced managers Andy Brandon and Dave Silberman scan their small, efficient domestic universe for out-of-favor companies with durable earnings, high returns on invested capital, and low financial leverage. Management teams must have a track record of solid capital discipline. And the focus is on firms trading at a discount to their intrinsic values. The team employs different metrics for various industries, but most begin with free cash flow yield as well as price- and enterprise-value multiples. The approach’s rigor and stock-level discipline have long set it apart.

For nearly 20 years, new purchases’ dividend yields had to be at least 2%. As yields and the quality of the universe dropped, however, the managing duo eventually decided to allow firms with any dividend level to become holdings. Then, when considerable changes to the prospectus benchmark Russell 1000 Value Index emerged, they decided to allow up to 20% of the portfolio to come from non-dividend-payers that met all the other standards. As of June 30, only 5% of assets go to one such holding, Amazon.com.

The overall portfolio usually holds 85-110 stocks. The skippers limit new purchases to 5% of assets but will allow positions to appreciate beyond that level. The portfolio maintains exposure to all the sectors in the Russell 1000 Value Index, but weightings can vary by up to 10 percentage points from that bogy’s.

After eventually lowering the dividend threshold in October 2025, the portfolio managers quickly added four holdings that previously met all standards save the 2% yield: Carrier, Danaher, Alphabet, and Disney. They later added seven more such holdings, and that whole group held 9% of assets as of June 2026. Most had been in the managers’ sibling US Value portfolio, which has no dividend requirement, and as a whole they’re more like this portfolio’s other holdings than, say, a highly leveraged energy firm with a big yield would be.

The skippers had an even more urgent and difficult decision to make in June, when Russell made Microsoft, Apple, and Amazon a collective 15% stake in the Russell 1000 Value Index after they’d previously been less than a 2% exposure. The managers determined that allowing 20% of the portfolio to conceivably be non-equity-income was pragmatic and sound; to date, Amazon is the only holding that doesn’t pay a dividend. The tough choice was cautious rather than aggressive.

As of June 30, about 60% of the portfolio had a dividend yield below the historical 2% threshold—much more the result of stock appreciation than purchases below that level or dividend cuts. Just more than a fourth of the portfolio was devoted to stocks whose yields were between 2% and 3%. And the remaining 12% of the portfolio was in stocks with dividends above 3%—with Verizon’s 5.6% yield at the top.

The managing duo and their analysts earn an Above Average People Pillar rating. Comanagers Andy Brandon and David Silberman have only run the strategy as a pair since September 2024, but that understates their experience with the portfolio and each other. They became named managers here in November 2019, working with longtime lead manager Clare Hart. Brandon started on this team in 2012 as an analyst. Silberman, a 37-year veteran with the firm, headed the firm’s equity investment director and corporate governance teams after managing private clients’ portfolios. The pair has complementary expertise: Brandon oversees energy, materials, and industrial holdings, while Silberman handles the utilities, healthcare, telecom, and technology areas. While the managers defer to each other’s expertise in their core areas, every material buy or sell demands the approval of both.

The managers have a solid supporting crew, starting with three dedicated analysts. Tony Lee joined the value team in 2018; he covers healthcare, insurance, and REITs. Lerone Vincent joined this team in 2022, covering technology and basic materials. In January 2024, Laura Huang joined and took over the financials that the retired manager Hart had long covered. All three analysts came from the firm’s central analyst group. And this five-person team also has access to the firm’s 21-person central analyst team, who average more than 25 years of industry experience.

J.P. Morgan continues to build a track record of strong stewardship, supporting a Parent rating upgrade to High from Above Average.

With more than USD 4 trillion in assets under management (including USD 1.3 trillion in money market funds) and a broad reach, J.P. Morgan is among the largest active asset managers in the US, Europe, and Asia. Although some multi-asset offerings have struggled over the past five years, prompting new leadership to make changes to investment teams, its equity and fixed-income teams boast long-tenured portfolio managers who practice repeatable investment processes that have generally produced strong long-term results. Most of its funds are core building blocks with long lifetimes, though its lineup around the world also includes more-specialized options: Two options-based equity-income exchange-traded funds, launched in 2020 and 2022, are now among the firm’s largest. J.P. Morgan has been an early mover in offering active ETFs, having converted 12 of its open-end mutual funds to the structure and launching others. It isn’t always at the forefront of emerging trends. While it has filed registration statements with the Securities and Exchange Commission for an interval fund and an ETF investing in private markets, it hasn’t yet introduced such an option for all investors, whether on its own or in partnership with another asset manager, unlike some of its closest competitors.

To support the firm’s diverse investment offerings, J.P. Morgan has invested heavily in both portfolio management tools and its client organization. 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. 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.

Incentives reinforce alignment with fundholders. Beginning more than 10 years ago, investment team compensation is tied to three-, five-, and 10-year performance, and portfolio managers must invest at least half of their deferred compensation in J.P. Morgan strategies. Many firms encourage portfolio managers to invest alongside fundholders, but J.P. Morgan goes a step further in requiring client-facing individuals to invest substantial portions of their incentive compensation in the funds.

Although some funds still face high cost hurdles, more than half of share classes charge competitive fees relative to peers.

The comanagers are off to a reasonable start.

Portfolio managers Andy Brandon and David Silberman took charge on Sept. 5, 2024, when former manager Clare Hart retired. Over that nearly two-year period through Aug. 31, 2026, the institutional shares of the US mutual fund gained 16.4%, matching the typical large-value Morningstar Category peer’s return and near the top quartile of a group of 44 similar, actively managed equity-income strategies. From the strategy’s origins in 2004, it gained 10.1% through August 2026, topping the typical large-value peer’s 8.6% and benchmark Russell 1000 Value Index’s 9.5% marks.

The strategy has held up better than its benchmark and peers in bear markets. The Russell 1000 Value has had five bear-market drops of 20% or more since 2004, with an annualized average drawdown of 33%. The typical large-value fund fell 31.7% on average, but this fund’s institutional shares only slipped 27.5%.

The strategy’s returns in the first half of 2026 show the recent challenges of equity-income funds. It gained 11.1%, lagging the Russell 1000 Value Index’s 13.8% gain. The strategy’s key contributors benefited from the artificial intelligence buildout: Seagate Technology, up 252%; Corning, up 192%; Lam Research, up 154%. But it lagged in the tech sector by 2.8 percentage points, due to an underweighting and the lack of several stocks that had huge gains, such as SanDisk, which soared 780%.

These skippers should be able to weather the current storm and those to come.

JPMorgan Equity Income I's Prospectus Adjusted Expense Ratio is 0.7% per year. It places it in the middle quintile of the Morningstar US Fund Large Value Category, where the median fee is 0.75% per year. This cost positioning translates into a Medalist Rating Price Score of 0.32, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.