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Portfolio > Mutual Funds

Morningstar’s April Winners and Losers

By Jane Smith

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Morningstar analysts have taken a critical eye to the fund universe lately. The fund research company just downgraded ratings for 10 funds — including two Vanguard products — and placed one target-date series under review.

On the bright side, its Manager Research Group upgraded seven U.S. funds from providers like Schwab, affirmed ratings for 59 funds and three target-date series; it also gave new ratings to 30 funds. 

A month earlier, the Chicago-based research group upgraded seven funds, downgraded four funds and gave new ratings to 29 mutual funds and 33 exchange-traded funds, while placing one fund under review.

The Morningstar Analyst Ratings represent analysts’ views that a fund can outperform its peers on a risk-adjusted basis over the long term. The five-tiered, qualitative scale has three positive levels — Gold, Silver and Bronze — as well as neutral and negative ratings.

Overall, 134 U.S. funds have a rating of Gold, 313 are Silver, 509 are Bronze, 509 are Neutral, and an unlucky 13 are Negative.

The medalist-rated funds, referred to as Morningstar Medalists, account for about 9% of funds sold in the U.S. and some 61% of assets under management. (Overall, the group’s analysts rate some $12 trillion of U.S. investor assets, or roughly 70% of U.S. investor assets.)

The April 2017 updates are as follows: 

Upgrades

  • Ariel International: Bronze (from Neutral)
  • PIMCO Low Duration: Silver (from Bronze)
  • Prudential Total Return Bond: Silver (from Bronze)
  • Schwab International Index: Silver (from Bronze)
  • Schwab Total Stock Market Index: Silver (from Bronze)
  • Schwab S&P 500 Index: Silver (from Bronze)
  • SPDR S&P MidCap 400 ETF: Silver (from Bronze)

Downgrades

  • BlackRock Basic Value: Neutral (from Bronze)
  • Bridgeway Blue Chip 35 Index: Bronze (from Silver)
  • CBRE Clarion Long/Short: Neutral (from Bronze)
  • Columbia Acorn International: Bronze (from Silver)
  • FPA Capital: Neutral (from Bronze)
  • Franklin Mutual Global Discovery: Bronze (from Silver)
  • Invesco Real Estate: Neutral (from Bronze
  • Merger: Bronze (from Silver)
  • Vanguard European Stock Index: Silver (from Gold)
  • Vanguard FTSE Europe ETF: Silver (from Gold)

Under Review

  • Wells Fargo Dow Jones Target-Date Series: Neutral

New Ratings (Partial List)

  • Ariel Appreciation: Bronze
  • Franklin Mutual Financial Services: Bronze
  • Hartford International Opportunities Y: Bronze
  • iShares Currency Hedged MSCI Eurozone: Bronze
  • Vanguard FTSE Pacific ETF: Bronze

The full list of new Morningstar ratings for 30 funds is available here.

— Check out Lipper Names Top Fund Managers of 2017 on ThinkAdvisor.

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