FYI: Two small changes in Morningstar’s MORN 1.49% fund-ratings system could continue the trend of downward pressure on the fees investors pay to asset managers and financial advisers.
Scheduled to start later in October, the forward-looking, medal-themed designations that the rating firm’s analysts apply to mutual funds and exchange-traded funds—Gold, Silver and Bronze, as well as its Neutral and Negative ratings—will rest not only on each fund’s prospects for beating its peer group, but also on its prospects for beating an index. Second, medal considerations will be weighed independently for different share classes (A, B, C and so on) of the same fund to reflect the separate benefits and fees each class has.
A third change is assessing if a strategy is hospitable to active management. (The other part of Morningstar’s system—the backward-looking star rating measuring a fund’s volatility-adjusted returns relative to a peer group—remains unchanged.)
Regards,
Ted
https://www.wsj.com/articles/why-morningstars-changes-in-its-rating-systems-could-lower-fund-fees-11570413841
