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September 09, 2014 at 09:51 AM
Morningstar says it has just changed the ratings of 15 funds on its “medalists” list, upgrading 13 and taking two down a notch. The Chicago-based research firm also issued new ratings on four funds.
The group changes its ratings when its analysts become convinced that a fund’s long-term ability to outperform its peer group and/or the relevant benchmark, on a risk-adjusted basis, has shifted. It works with a five-tier scale, which has three positive levels — gold, silver and bronze — and neutral and negative ratings.
(Morningstar began using this ratings system, based on forward-looking expectations, for mutual funds in November 2011. Star ratings from one to five are used to measure past performance.)
Ratings Game
As of Aug. 30, 157 U.S. mutual funds had a gold Morningstar rating, 289 funds had a silver rating, 331 funds were rated bronze, 336 funds had a neutral rating, and 40 funds were rated negative.
Only 10% percent of mutual funds available for sale in the United States are currently Morningstar medalists, the research firm says.
Upgrades
Morningstar upgraded The Principal’s LifeTime target-date funds to bronze from neutral.
This includes funds with target dates of 2010, 2015, 2020, 2015, 2030, 2035, 2040, 2045, 2050, 2055 and 2060.
The Principal LifeTime Funds have investment mixes that become more conservative over time; the asset allocation is regularly readjusted within a time frame that extends 10-15 years beyond the target date, at which point it reaches its most conservative allocation, according to the company.
Principal’s LifeTime Strategic Fund was also upgraded to bronze from neutral, as was the TIAA-CREF Growth and Income Fund.
Downgrades
