The Fiduciary Grade, which rates the largest 500 mutual funds on a scale of ‘A’ to ‘F’, has a criteria that covers fund’s past regulatory issues, board quality, manager incentives, fees, and corporate culture. The goal is to see how closely a fund aligns its interests with those of the shareholders. In the coming months, Morningstar will apply a Fiduciary Grade to 1,500 further mutual funds.
“Many investors begin their search for a fund by focusing on measurable, tangible factors such as performance and volatility, but it’s equally important to consider the intangibles associated with making an investment decision,” said Kunal Kapoor, director of mutual fund analysis for Morningstar, in a press release Tuesday. “Our analysts have long considered these less-tangible factors in an effort to help investors determine which fund companies do the best job of safeguarding their interests. We’ve included this type of information in our written analyst commentaries for years, and now we’re taking the next step and presenting our research in a format that will make it easier for investors to compare funds’ corporate governance track records and identify the firms that embody the industry’s best practices.”
The Fiduciary Grades are compiled and based upon information from public filings, responses to a detailed survey Morningstar sent to each fund company, and Morningstar fund analyst research. The rankings are available to Premium Members of Morningstar.com, the company’s Web site for investors.
– Kip McDaniel