JPMorgan Diversified Fund earns an Above Average Process Pillar rating.
The largest contributor to the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 3.3 stars. Noteworthy risk-adjusted performance also supports the process. This can be seen in the fund's five-year alpha calculated relative to the category index, which suggests that the managers have shown skill in their allocation of risk. However, the process is limited by the parent firm's five-year retention rate of 80%, which suggests it could do more to retain its portfolio managers.
This strategy maintains an equity allocation that hews closely to the typical Moderate Allocation peer but holds more assets in fixed income, with a 57% to 39% equity to fixed-income composition. Its equity sleeve has been persistently biased to growth stocks compared with the category average. Although in terms of market-cap exposure, it moves close to the rest of the pack. The strategy has three region or sector biases compared to category peers. The most noteworthy bias is a consistent overweight in the Developed Europe region. It also maintains an overweight bias toward the consumer cyclical sector. And finally, in the fund's most recent portfolio, less assets were allocated to developed markets regions. Although, this bias has not existed over time.
The portfolio has allocations in its top two sectors, consumer cyclical and energy, that are similar to the category. The sectors with low exposure compared to category peers are communication services and healthcare, underweight the average by 2.8 and 2.7 percentage points of assets, respectively. The portfolio is overweight in Developed Europe and Japan regions relative to the category average by 6.8 percentage points and 3.8 percentage points, respectively. The regions with low exposure compared to their category peers are North America and Middle East and Africa, with North America underweight the average by 17.0 percentage points and Middle East and Africa
similar to the average.