A Word on Ratings

Editor's Views: Fund ratings are a useful tool for any investor, but they're not a buy list. And is Eat Out to Help Out more of a hindrance for local businesses? 

Holly Black 21 August, 2020 | 10:26AM
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Editorial

It seems prudent to point out that Morningstar’s analyst ratings are not a buy list. These ratings are awarded based on how likely a fund is to outperform (after fees) its peers, while also taking into account factors such as its parent company, managers and the stability of its team.

When the rating system was enhanced last year, one of the things I found most exciting was that different share classes of the same fund could be awarded different Medal ratings to each other. That’s important because fees vary across share classes, and how much you pay to invest in a fund directly impacts the returns you can achieve. Anything that helps ensure people don’t overpay for their investment has got my vote.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Holly Black  is Senior Editor, Morningstar.co.uk