Almost daily, asset managers roll out new mutual funds, ETFs and other products. (The latest funds are highlighted each Monday in ThinkAdvisor’s Portfolio Products Roundup.)
Chicago-based Morningstar provides data and in-depth research on some 433,000 investment offerings worldwide and says it does its best to keep advisors and investors up to speed on each and every product on the market.
“Although we spend most of our time updating the Morningstar Analyst Ratings of funds we’ve already rated, we continue to add funds to our ratings universe,” said Russel Kinnel in a report last Monday. “Some of these funds are relatively new, while others have been around for a long time.”
Morningstar analysts give funds a rating of gold, silver, bronze, neutral or negative.
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“We don’t have any rules regarding at what level a fund must start; we just rate them where we think they fit,” Kinnel explained.
Here are five of Morningstar’s most recent ratings.
DFA International Small Company (DFISX) is rated silver, “because it is right in DFA’s wheelhouse,” according to Kinnel.
This fund from Dimensional Fund Advisors delivers “excellent small-cap passive exposure by tracking a savvy approach to trading less-liquid names,” the Morningstar analyst explains. “This enables the fund to perform better than most small-cap benchmarks both in the United States and abroad, even though they aren’t taking a view on individual stocks.”
The fund charges 0.56%, which makes it one of the cheapest funds in the category, Kinnel adds.
Vanguard FTSE All-World ex-U.S. Small Cap Fund (VFSVX) is rated silver, though it has just three years under its belt.
According to Kinnel, “Your choice for foreign small-cap passive funds really comes down to this one versus the aforementioned DFA fund.”
The Vanguard fund, though, charges 0.45%, or 11 basis points less than the DFA fund. The fund does not yet offer the cheaper Admiral share class; however, it can be bought as an ETF with a lower 0.25% fee.
While the Vanguard fund tracks a low-turnover index, Morningstar’s Kinnel says he slightly prefers its DFA counterpart “because it has beaten Vanguard’s index over the long haul.”