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On the heels of David's appraisal of PRSNX (TRP Global Multi-Sector Bond) in April---because Morningstar had "orphaned" it--- I note that Morningstar has taken one of its 5 stars. Now a 4-star fund. Do I care? No. Still holding it, and still quite satisfied with it. Did M'star catch wind of David's words...?
Hi Crash - remember the star ratings are entirely quantitative, within whatever category M* places the fund - no opinion involved. Plus, after a go-go run in credit FI generally, it may not be a negative to be a star down; could mean it's positioned in a way that won't lead to a big loss in the next downturn.
Not sure what you mean by "orphaned". The fund lost its "parent" category (multi-sector bond fund) around 2012-2013; the world bond category "adopted" it. Around the same time M*'s analysts also abandoned the poor little baby (last analyst report was 12/21/11).
The category change could have adversely affected the current star rating. The fund had been fairly lousy as a multi-sector fund, but until this year (2017) it had put up top quintile numbers as a world bond fund.
Because the fund switched categories, M* underweighted its pre-2013 performance in awarding stars. (From M*: "When a fund changes investment categories, its historical information is given less weight, depending on the magnitude of the change.")
So M* is rating it (mostly) on five year performance, not the usual ten. This means that any recent changes in performance get magnified (not balanced out by a 10 year rating). This year, the fund has been slightly subpar. That fact, overweighted, may explain the removal of a star.
Comments
The category change could have adversely affected the current star rating. The fund had been fairly lousy as a multi-sector fund, but until this year (2017) it had put up top quintile numbers as a world bond fund.
Because the fund switched categories, M* underweighted its pre-2013 performance in awarding stars. (From M*: "When a fund changes investment categories, its historical information is given less weight, depending on the magnitude of the change.")
So M* is rating it (mostly) on five year performance, not the usual ten. This means that any recent changes in performance get magnified (not balanced out by a 10 year rating). This year, the fund has been slightly subpar. That fact, overweighted, may explain the removal of a star.