Why Has the JPMorgan Large-Cap Growth Fund Done so Poorly in 2016?



Performance evaluation

The JPMorgan Large-Cap Growth Fund Class A (OLGAX) has dived by 3.9% YTD (year-to-date) in 2016. This decline makes it the worst performer among the 12 funds we’ve chosen for this review. In fact, for all periods plotted in the graph below, the fund is placed among the bottom three funds.

We have graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF). Let’s look at what has contributed to this forgettable performance by the fund YTD in 2016.

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Portfolio composition and contribution to returns

Much like most of the funds in this review, the negative contribution from the healthcare sector has been primarily responsible for the poor showing by OLGAX YTD in 2016. Regeneron Pharmaceuticals (REGN) is head-and-shoulders above all other detractors. Other decliners include Vertex Pharmaceuticals (VRTX), Celgene (CELG), and AmerisourceBergen (ABC). Intuitive Surgical (ISRG) and Johnson & Johnson (JNJ) have contributed positively, but their combined quanta were too small to have any material impact on the overall negative contributions from the sector.

Energy and financials have also contributed negatively. Marathon Petroleum (MPC) has dragged on the energy sector, while TD Ameritrade Holding (AMTD) has weighed on financials.

The absence of any major negative contributor has helped the consumer staples sector contribute positively to OLGAX in 2016 so far. Reynolds American (RAI) has led gainers from the sector, which include Wal-Mart Stores (WMT) and Monster Beverage (MNST).

Materials follow staples and have benefitted from Sherwin-Williams (SHW). Had it not been for LyondellBasell Industries (LYB), the sector would have contributed even more.

Investor takeaways

OLGAX has been having a forgettable time for the past year or so. The fund has underperformed the passively managed SPDR S&P 500 ETF (SPY). Investors nearing the completion of their investment horizon would do well to consider other options to invest. Potential investors might also do well to look at other investment avenues for investing in US stocks.

In the next part, we’ll look at the ClearBridge Aggressive Growth Fund Class A (SHRAX).


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