JPMorgan Income’s experienced manager trio, established approach, and focus on consistent income makes this a compelling multisector bond offering.
The strategy features a very capable lead manager. Andrew Norelli has anchored this fund since its mid-2014 inception and continues to evolve with the additions of Drew Headley and Thomas Hauser, securitized and high-yield specialists, respectively. The fund draws on JPMorgan’s Global Fixed Income, Currency, & Commodities platform, which includes a small army of sector specialists, research analysts, traders, and risk managers. These common resources across the firm’s fixed-income strategies highlight the depth, experience, and collaboration required to effectively manage this wide-ranging mandate. The comanagers’ broad fixed-income knowledge is key to understanding relative value, but their specialty expertise gives this team an edge.
That relative value approach underscores a solid process. Like other firm managers, this team draws on the broader group for its macro outlook to guide broad positioning. Their daily interactions inform sector and security selection and focus on investments that will deliver high, consistent income. Yet its benchmark-agnostic mandate allows them wide discretion to implement the managers’ best ideas. Despite this flexibility, the fund aims to keep volatility between 4% and 6%, as measured by standard deviation.
The flexibility focuses on high-yield corporates and securitized debt that constitute the majority of the fund’s assets. Better relative valuations and risk-adjusted return prospects have led to higher securitized bond stakes in recent years, which made up nearly 70% of assets (as of September 2023), up from about 65% a year ago. However, the team effectively diversifies these holdings that include agency mortgage-backed securities, nonagency MBS, commercial MBS, and asset-backed securities. A cautious economic outlook since 2022 has resulted in reduced credit risk. For example, the fund’s agency MBS stakes doubled to 20.2% of assets (as of September 2023) from a year ago while its 22% high-yield corporate allocation fell by about 6 percentage points.
The fund has delivered solid long-term absolute and risk-adjusted results. Since its July 2014 inception, the R6 shares’ 3.0% annualized return through November 2023 beat its average multisector bond peer’s 2.4% and was better than 78% of rivals. The fund’s normal yield advantage versus peers helped drive performance, but the strategy’s elastic positioning can lead to varied outcomes over shorter periods when riskier assets are out of favor.