Commentary: Large Cap Growth Fund
Transcription
Commentary: Large Cap Growth Fund
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE JPMorgan Large Cap Growth Fund A Shares (OLGAX) C Shares (OLGCX) Select Shares (SEEGX) Data as of November 30, 2014 Fund overview Investment objective The JPMorgan Large Cap Growth Fund strives to meet its investment objective by outperforming the Russell 1000 Growth Index over a full market cycle through stock selection while managing risk. The strategy looks for companies that have the ability to deliver higher growth than market expectations over the next several years. The investment process is focused on identifying stocks that have large addressable markets, are executing on competitive advantage and experiencing good price momentum. We would expect the strategy to outperform during periods where growth and momentum are in favor, while headwinds could occur when growth and momentum are challenged. The strategy is designed to reduce risk during such unfavorable market environments, allowing for more consistent returns over time. Objective The Fund seeks long-term capital appreciation. Strategy/Investment process • Invests primarily in equity securities of large capitalization companies with market capitalizations similar to those within the universe of the Russell 1000 Growth Index. • Seeks to invest in stocks that have potential to exceed market expectations for a prolonged period of time. • Employs a process that combines research, stock selection and risk management to construct a diversified portfolio. J.P. Morgan Funds Objective Box Value Core Growth Large Mid Small J.P. Morgan Funds Objective Box is based on the Fund's overall targeted capitalization and valuation range(s) as described in the Fund's prospectus. Portfolio managers/industry experience Giri Devulapally, 22 years Portfolio characteristics P/E ratio (1 yr. forecast)1 P/B ratio2 Beta (3 yr.)3 Sharpe ratio (3 yr.)4 Wtd. avg. market cap (in billions) Number of holdings Fund assets (in billions) Sector breakdown (%)* Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Materials Short-Term Investments *Due to rounding, values may not total 100%. 23.1 6.4 1.06 1.24 $107.8 67 $15.55 21.2 4.3 2.8 4.1 22.1 8.8 28.2 5.9 2.5 Portfolio review The JPMorgan Large Cap Growth Fund (Select Class Shares) returned 1.75% for the month ended November 30, 2014, compared to its benchmark, the Russell 1000 Growth Index, which returned 3.17%. The Fund underperformed its benchmark as stock selection was the main driver of underperformance during the month, with the healthcare (22.1% portfolio weighting) and consumer discretionary (21.2% portfolio weighting) sectors as the largest detractors. Stock selection and underweight exposure in the energy sector (2.8% portfolio weighting) contributed to performance. On an individual stock level, overweight positions in Gilead Sciences, Inc. (4.1% portfolio weighting) and Pioneer Natural Resources Co. (0.8% portfolio weighting) were the top detractors during the month. Gilead has been a strong source of return for the portfolio; however, the stock traded down on news of potential price caps on Hepatitis C drugs, which could impact Gilead sales. We view this as a short-term issue and Gilead remains a high-conviction name within the portfolio. Pioneer Natural Resources traded down on general weakness in the oil and broad commodities markets during the period. On the positive side, an overweight position in Delta Air Lines, Inc. (1.9% portfolio weighting) and an underweight position in Schlumberger Ltd. (0.0% portfolio weighting) were the two largest contributors to relative performance. Delta stands to benefit from lower oil, as jet fuel expenses fall, which led the stock to trade higher. Schlumberger, which is not owned in the portfolio, was impacted by negative sentiment as oil prices declined. Fund positioning The portfolio's positioning has not materially changed since the prior month. Healthcare (22.1% portfolio weighting) is an area that we continue to find strong growth opportunities, along with the consumer discretionary sector (21.2% portfolio weighting). The materials sector (5.9% portfolio weighting) also continues to be an overweight exposure. The portfolio remains underweight in the consumer staples (4.3% portfolio weighting), industrials (8.8% portfolio weighting) and telecommunication services (0.0% portfolio weighting) sectors, as we struggle to identify stocks in these sectors that meet our growth criteria. VALUATION RATIOS DEFINED: 1P/E ratio: the number by which earnings per share is multiplied to estimate a stock's value. 2P/B ratio: the relationship between a stock's price and the book value of that stock. RISK MEASURES DEFINED: Risk measures are calculated based upon the Funds' broad-based index as stated in the prospectus. 3Beta: The systematic risk of a Fund. The beta of a Fund is its sensitivity to a benchmark. A Fund with a beta of 1.0 is as risky as the benchmark and would therefore provide expected returns equal to those of the market during both up and down periods. 4Sharpe ratio: A risk-adjusted measure that determines the reward per unit of risk. The numerator is the difference between the Fund’s annualized return and the annualized return of the risk-free instrument (Citigroup 3-Month Treasury Bill Index) and the denominator is the Fund’s standard deviation. The Sharpe ratio is calculated over a 36-month period based on the Fund’s returns. The greater the Fund’s Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a riskfree instrument would perform better than the Fund. The Sharpe ratio shown is based on the Fund's Class A Shares or the oldest share class, where Class A Shares are not available. Please refer to the back of the page for important disclosure information including risks associated with investing in the Fund. The manager seeks to achieve the stated objectives. There is no guarantee the objectives will be met. The securities highlighted above have been selected based on their significance and are shown for illustrative purposes only. They are not recommendations. NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE JPMorgan Large Cap Growth Fund A Shares (OLGAX) C Shares (OLGCX) Select Shares (SEEGX) Data as of November 30, 2014 Contact JPMorgan Distribution Services, Inc. at 1-800480-4111 for a fund prospectus. You can also visit us at www.jpmorganfunds.com. Investors should carefully consider the investment objectives and risks as well as charges and expenses of the mutual fund before investing. The prospectus contains this and other information about the mutual fund. Read the prospectus carefully before investing. RISKS ASSOCIATED WITH INVESTING IN THE FUND: The price of equity securities may rise or fall because of changes in the broad market or changes in a company’s financial condition, sometimes rapidly or unpredictably. These price movements may result from factors affecting individual companies, sectors or industries selected for the Fund’s portfolio or the securities market as a whole, such as changes in economic or political conditions. Equity securities are subject to “stock market risk,” meaning that stock prices in general (or in particular, the prices of the types of securities in which a fund invests) may decline over short or extended periods of time. When the value of a Fund’s securities goes down, an investment in a Fund decreases in value. ©2014, American Bankers Association, CUSIP Database provided by the Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. All rights reserved. Total return assumes reinvestment of dividends and capital gains distributions and reflects the deduction of any sales charges, where applicable. Performance may reflect the waiver of a portion of the Fund's advisory or administrative fees for certain periods since the inception date. If fees had not been waived, performance would have been less favorable. J.P. Morgan Funds are distributed by JPMorgan Distribution Services, Inc., which is an affiliate of JPMorgan Chase & Co. Affiliates of JPMorgan Chase & Co. receive fees for providing various services to the funds. JPMorgan Distribution Services, Inc. is a member of FINRA/SIPC. J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co. Those businesses include, but are not limited to, JPMorgan Chase Bank, N.A., J.P. Morgan Investment Management Inc., Security Capital Research & Management Incorporated and J.P. Morgan Alternative Asset Management, Inc. ©JPMorgan Chase & Co., December 2014 FC-LCG-1114 Total returns Average annual total returns Fund performance** Month-end total returns at NAV (%) as of 11/30/2014 1 month 3 month YTD 1 yr 3 yrs 5 yrs 10 yrs A Shares 1.76 3.43 11.11 14.53 17.50 16.58 9.09 C Shares 1.72 3.30 10.62 13.95 16.90 15.98 8.52 Select Shares 1.75 3.48 11.30 14.73 17.71 16.80 9.32 Russell 1000 Growth Index 3.17 4.35 14.24 17.50 20.55 16.77 9.02 Lipper Large-Cap Growth Funds Index 2.52 3.68 11.36 14.92 19.85 15.06 7.89 With sales charges (%) A Shares with 5.25% max. sales charge -3.58 -2.00 5.28 8.51 15.41 15.34 8.50 C Shares with 1.00% max. CDSC 0.72 2.30 9.62 12.95 16.90 15.98 8.52 Quarter-end total returns at NAV (%) as of 9/30/2014 A Shares -1.61 3.39 5.70 16.27 19.58 16.97 9.08 C Shares -1.65 3.25 5.33 15.70 18.99 16.38 8.49 Select Shares -1.58 3.44 5.85 16.48 19.80 17.21 9.31 Russell 1000 Growth Index -1.45 1.49 7.89 19.15 22.45 16.50 8.94 Lipper Large-Cap Growth Funds Index -1.74 1.27 5.53 16.87 21.75 14.71 7.91 With sales charges (%) A Shares with 5.25% max. sales charge -6.77 -2.04 0.15 10.17 17.46 15.72 8.49 C Shares with 1.00% max. CDSC -2.65 2.25 4.33 14.70 18.99 16.38 8.49 **The performance quoted is past performance and is not a guarantee of future results. Mutual funds are subject to certain market risks. Investment returns and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than original cost. Current performance may be higher or lower than the performance data shown. For performance current to the most recent month-end, please call 1-800-480-4111. Morningstar ratings as of 11/30/2014 Overall 3-Year 5-Year 10-Year Rating/number of funds in category ★★★★/1496 ★★/1496 ★★★★/1324 ★★★★/905 Select share class: Large Growth Category The Overall Morningstar Rating™ for a fund is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. Annual operating expenses A Shares C Shares Select Shares Expense cap expiration date 10/31/2015 10/31/2015 10/31/2015 Expense cap (%) 1.05 1.55 0.90 Total annual Fund operating expenses (%) 1.21 1.69 0.91 5 Fee waivers and/or expense reimbursements (%) (0.16) (0.14) (0.01) 5 Net expenses (%) 1.05 1.55 0.90 5 The Investment Advisor, Administrator and Distributor (the "Service Providers") have contractually agreed to waive fees and/or reimburse expenses to the extent that Total Annual Operating Expenses (excluding Acquired Fund Fees and Expenses, dividend expenses relating to short sales, interest, taxes, expenses related to litigation and potential litigation, extraordinary expenses and expenses related to the Board of Trustees’ deferred compensation plan) exceed the expense cap of the average daily net assets through the expense cap expiration date. This contract continues through that date, at which time the Service Providers will determine whether or not to renew or revise it. Top ten holdings (%) Company name Sector Percentage Facebook, Inc., Class A Information Technology 4.3 Gilead Sciences, Inc. Health Care 4.1 MasterCard, Inc., Class A Information Technology 3.7 Apple, Inc. Information Technology 3.6 Home Depot, Inc. (The) Consumer Discretionary 3.6 Celgene Corp. Health Care 3.3 Google, Inc., Class C Information Technology 2.7 Visa, Inc., Class A Information Technology 2.6 Comcast Corp., Class A Consumer Discretionary 2.5 Alexion Pharmaceuticals, Inc. Health Care 2.4 TOP 10 HOLDINGS: The top 10 holdings listed reflect only the Fund's long-term investments. Short-term investments are excluded. Holdings are subject to change. The holdings listed should not be considered recommendations to purchase or sell a particular security. Each individual security is calculated as a percentage of the aggregate market value of the securities held in the Fund and does not include the use of derivative positions, where applicable. Portfolio statistics A Shares C Shares Select Shares Inception date 2/22/1994 11/4/1997 2/28/1992 Investment minimum $1,000 $1,000 $1M Fund number 3148 3575 3118 CUSIP 4812C0506 4812C0522 4812C0530 MORNINGSTAR DISCLOSURE: ©2014, Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damage or losses arising from any use of this information. For each fund with a three-year history, Morningstar calculates a Morningstar Rating™ metric each month by subtracting the return on a 90-day U.S. Treasury Bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk. The top 10% of funds in each broad asset class receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance is no guarantee of future results. Different share classes may have different ratings. INDEXES DEFINED: The Russell 1000 Growth Index is an unmanaged index which measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The performance of the index does not reflect the deduction of expenses associated with a fund, such as investment management fees. By contrast, the performance of the Fund reflects the deduction of fund expenses, including sales charges if applicable. Investors can not invest directly in an index. The performance of the Lipper Large-Cap Growth Funds Index includes expenses associated with a mutual fund, such as investment management fees. These expenses are not identical to the expenses charged by the Fund.