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Morningstar Changes Fund Rating System

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NU Online News Service, April 22, 4:31 p.m. – Morningstar Inc., Chicago, says it is making extensive changes to its well-known rating system for mutual funds.

The new rating system begins in July, using performance data for the period ending June 30, 2002, Morningstar says.

The biggest change under the new method is that Morningstar will rank and rate funds within nearly 50 equity categories, rather than just four broad categories, as it does now

The new system is aimed at steering investors away from buying the latest “hot” fund and toward better planning, diversification and fund selection, Morningstar says.

Morningstar says its switch to smaller groups of funds will help its analysts to get a better handle on whether a given fund manager has added value.