Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I found this advertised fact about TIAA CREF funny...
It's kinda like saying... half of all people are above average (by th way...half are below average too!)...As a point of reference, 90% of all Wasatch funds are above average. Also the disclaimor points out that their ability to achieve average success is not gauranteed going forward.
Morningstar rates fewer than 1/3 of funds 4* or 5* - 32.5%, to be precise, according to M*'s Fund Rating Factsheet. A 54% showing is significantly above average.
Regarding Wasatch, M* recognizes 20 funds, of which three are unrated. Of the remaining 17, 13 (76%) are rated 4* or 5*. On a dollar-weighted average, it is only in the international equity arena where Wasatch significantly outshines retail TIAA-CREF funds, averaging 3.5* vs. the latter's 2.6*. The two families perform at the same 3.6* level on domestic equity funds, and similarly (3.4* for Wasatch, 3.3* for TIAA-CREF) with taxable bond funds. Wasatch has no muni funds, and TIAA-CREF's attracts so little money (1/2% of its AUM) that it's not worth mentioning.
More than anything else, this shows the games one can play with numbers. When TIAA-CREF talks about star ratings for annuities, I don't know whether it is talking about the rating for each annuity account (which would include annuity wrapper fees), or the ratings of the underlying funds. (Since TIAA-CREF's wrapper fees are so low, dropping to as little as 10 basis points, the annuity account ratings tend to be higher than the underlying fund ratings, regardless of how well or poorly those funds perform.) I don't know whether this is counting all the funds in TIAA-CREF's annuities, or just the ones managed by TIAA-CREF. I don't know whether this is including just their retail offerings, or offerings available to 403(b) plans.
So, while you find the ad to be fluff because of the percentages; I find it fluff because I don't know what they're talking about.
Thanks for chiming in...here's a link to an article that questions the value of Morningstar ratings. I guess I'm a bit incorrect with criticism of their ad claims. Definitely worse choices out there than TIAA-CREF, but as you point out; sometimes it's the only choice for 403(b) plans.
Article: Do Morningstar Ratings Help You Find the Best Mutual Funds?
"According to studies conducted by Morningstar and Vanguard, all evidence demonstrates that by looking for funds with a lower expense ratio, you’ll do better than by seeking out funds with a great Morningstar rating."
M* knows very well the games fund companies play with its star ratings. And they will gloat all the way to the bank as firms market their 'gold, silver, bronze" analyst ratings, too. Even T Rowe Price has an add saying something like 75% of their funds got 4-5 stars. Like bee said in the first post, do you suppose they will shut down their other funds?
Comments
Regarding Wasatch, M* recognizes 20 funds, of which three are unrated. Of the remaining 17, 13 (76%) are rated 4* or 5*. On a dollar-weighted average, it is only in the international equity arena where Wasatch significantly outshines retail TIAA-CREF funds, averaging 3.5* vs. the latter's 2.6*. The two families perform at the same 3.6* level on domestic equity funds, and similarly (3.4* for Wasatch, 3.3* for TIAA-CREF) with taxable bond funds. Wasatch has no muni funds, and TIAA-CREF's attracts so little money (1/2% of its AUM) that it's not worth mentioning.
More than anything else, this shows the games one can play with numbers. When TIAA-CREF talks about star ratings for annuities, I don't know whether it is talking about the rating for each annuity account (which would include annuity wrapper fees), or the ratings of the underlying funds. (Since TIAA-CREF's wrapper fees are so low, dropping to as little as 10 basis points, the annuity account ratings tend to be higher than the underlying fund ratings, regardless of how well or poorly those funds perform.) I don't know whether this is counting all the funds in TIAA-CREF's annuities, or just the ones managed by TIAA-CREF. I don't know whether this is including just their retail offerings, or offerings available to 403(b) plans.
So, while you find the ad to be fluff because of the percentages; I find it fluff because I don't know what they're talking about.
Thanks for chiming in...here's a link to an article that questions the value of Morningstar ratings. I guess I'm a bit incorrect with criticism of their ad claims. Definitely worse choices out there than TIAA-CREF, but as you point out; sometimes it's the only choice for 403(b) plans.
Article:
Do Morningstar Ratings Help You Find the Best Mutual Funds?
"According to studies conducted by Morningstar and Vanguard, all evidence demonstrates that by looking for funds with a lower expense ratio, you’ll do better than by seeking out funds with a great Morningstar rating."
nerdwallet.com/blog/investing/2013/morningstar-best-mutual-funds/