JPMorgan Core Bond’s Deep Team and Disciplined Approach Earn It an Upgrade

JPMorgan Core Bond’s JCBUX deep resources, as exemplified by a smooth recent manager transition and the 2023 addition of securitized bond specialist Andy Melchiorre and rates expert Edward Fitzpatrick to the manager roster, prompted a March 2024 upgrade of the fund’s People Pillar rating to High from Above Average. Increased confidence in the team’s bottom-up security-selection process and its focus on higher-rated fare also drove an upgrade of its Process rating to High from Above Average. As a result, the Morningstar Medalist Rating of its cheapest share class rose to Gold from Silver.

Melchiorre and Fitzpatrick joined an already-proven manager roster. Lead manager Rick Figuly has steered the fund to strong risk-adjusted returns since September 2015, and Justin Rucker joined him as comanager in March 2019. True, fixed-income CIO Steve Lear was a comanager of this fund when he left the firm in March 2024, but he wasn’t involved in the day-to-day management of the strategy. Lear also telegraphed his plans to retire nine months in advance, which allowed the firm to bolster the roster with Melchiorre and Fitzpatrick.

The team’s approach to portfolio construction is cautious and appealing. The team limits credit risk by only purchasing investment-grade securities, and it avoids big interest-rate bets versus the Bloomberg US Aggregate Bond Index. The team often adds value by focusing on various forms of securitized debt, investing in structures with positive convexity (those that will gain more when rates decline than they will lose when rates rise). As a result of this strategy, the fund has typically held up well when credit suffers or interest rates jump.

Key Morningstar Metrics for JPMorgan Core Bond

Morningstar Medalist Rating: Gold

Process Pillar: High

People Pillar: High

Parent Pillar: Above Average

A Strong Team Earns an Upgrade Across Four Guggenheim Fixed-Income Strategies

The team that manages Guggenheim Core Bond Fund GIUSX, Guggenheim Limited Duration GIKRX, Guggenheim Macro Opportunities GIOSX, and Guggenheim Total Return Bond GIBRX earned an upgrade of its People rating to High from Above Average. As a result, the Morningstar Medalist Rating of the cheapest share classes of each of the four funds rose to Silver (from Bronze in each case except for Limited Duration, which had been rated Neutral).

The team suffered a substantial, unexpected loss when CIO Scott Minerd died in late 2022. But he had set up the team for success through savvy hires. New CIO Anne Walsh, a longtime manager on three of the four portfolios, named veteran manager Steven Brown the new fixed-income CIO. As of January 2023, Adam Bloch and Evan Serdensky were named comanagers on all the funds. And the managers are backed by a 50-strong corporate credit team as well as dedicated groups specializing in macro, interest rates, and structured credit.

The team also makes good use of its resources, allowing separate groups to make decisions in their areas of expertise and avoiding quick, rash calls. Thus, the team should be able to continue to execute well across these four distinctive mandates.

Key Morningstar Metrics for Guggenheim Core Bond, Limited Duration, Macro Opportunities, and Total Return Bond

Morningstar Medalist Rating: Silver

Process Pillar: Above Average

People Pillar: High

Parent Pillar: Average

Complexity Drives a Downgrade at JHancock Multimanager Lifetime Target-Date Series

An overly complex approach erodes our confidence in JHancock Multimanager Lifetime target-date series, meriting a downgrade of its Process rating to Below Average from Average. The cheapest share classes of the series continue to earn a Morningstar Medalist Rating of Neutral, though three other share classes were downgraded to Negative.

The team that runs this series, led by multi-asset CIO Nathan Thooft and US head of asset allocation Robert Sykes, remains adequate. But the series features too many moving parts. Strategic allocations are determined by the team’s five-year asset-class forecasts, and allocations can shift significantly if the forecasts do. The team can also make tactical shifts based on its 12-18-month macro views. These moves are made by adjusting the weightings of the underlying funds—a sprawling lineup, even after some streamlining, of 26–33 portfolios depending on the fund within the series. However, two of the series’ largest holdings, JHancock US Sector Rotation NAV and International Strategic Equity Allocation NAV, make tactical shifts of their own, which may neutralize or exaggerate tilts implemented by the target-date team. Furthermore, those two funds have struggled to add value in recent years.

Key Morningstar Metrics for JHancock Multimanager Lifetime series

Morningstar Medalist Rating: Neutral

Process Pillar: Below Average

People Pillar: Average

Parent Pillar: Above Average