After a Brilliant 2015, a Less-than-Wonderful YTD 2016 for VHIAX



JPMorgan Growth Advantage Fund performance

In this article, we’ll specifically outline the performance of the JPMorgan Growth Advantage Fund – Class A (VHIAX), one of the classes available for retail investors. The fund is invested in stocks of companies like Celgene (CELG), Waste Connections (WCN), ULTA Salon, Cosmetics & Fragrance(ULTA), Dollar General (DG), and Concho Resources (CXO).

From a purely NAV (net asset value) return standpoint, VHIAX was placed sixth among its peer group in the one-year period until March 18, 2016. When we refer to the peer group, we mean the group of 12 funds chosen for this review. For our return comparison, we have chosen two ETFs: the Vanguard 500 ETF (VOO) and the iShares Russell 1000 Growth ETF (IWF).

For evaluating benchmark-related metrics, we’ve chosen the S&P 500 as the benchmark for all funds in this review, which VOO tracks.

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Other metrics

The JPMorgan Growth Advantage Fund’s standard deviation, or the volatility of returns, in the one-year period until March 18 was 19.4%. This is much higher than both the S&P 500’s 16.7% as well as the peer group’s average of 18.4%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, came in at zero for the one-year period ended March 18. The Sharpe Ratio for 2015 had placed the VHIAX first among its peers.

The information ratio, calculated with the S&P 500 as the benchmark, was negative for the one-year period ended March 18. We can’t evaluate a negative information ratio, though. The information ratio shows the consistency of a fund manager along with measuring his or her ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio had ranked it as the best fund.

A note to investors

VHIAX had not only generated the highest risk-adjusted returns and has been the most consistent with generating those returns in 2015, it was also the highest alpha generator for the year among its peers. In the one-year period ended March 18, 2016, the fund’s alpha was placed second among its peers.

However, YTD 2016 has not been pleasant for the JPMorgan Growth Advantage Fund. Due to these mixed quantitative metrics, investors may wish to look more closely at investment style and strategy in order to assess whether VHIAX is right for them. Current investors needs to see how 2016 pans out for the fund, given its superlative metrics in 2015.

In the next article, we’ll look at the Vanguard Morgan Growth Fund – Investor Shares (VMRGX).


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