Call it a fight. Call it a battle. Whatever you want to call it, in the world of mutual funds, a proverbial shot was fired on October 25th when the Wall Street Journal took Morningstar, Inc. to task over its fund “star” ratings. By now, we assume most advisors have read the critical piece titled “The Morningstar Mirage.” Executives from Morningstar responded with their own rebuttals; mostly acknowledging the limitations of analysis based on past performance but also defending their methodology based on the WSJ’s own analysis which actually showed that the “star” ratings did in fact tilt the odds in the investors’ favor. Which Morningstar states is the primary objective. Even Twitter got in on the debate sparking something of a mutual fund fire storm…well, really more like a sparkler, but whatever.
Topics: From the Desk of Richard Pell