Small funds get less Morningstar attention, says industry watcher

Mutual Fund Observer finds many five-star small funds no longer covered

Mar 17, 2017 @ 1:04 pm

By InvestmentNews

Small mutual funds, like small-company stocks, tend to be overlooked. And fund research giant Morningstar is covering fewer of those small funds than it once did, according to David Snowball, whose Mutual Fund Observer provides insights and commentary about fund investing.

Of the 599 funds that have a rating of four or five stars for the past three-, five- and 10-year periods, as well as an overall rating of four or five stars, Mutual Fund Observer found that fewer than 40% (237) have analyst coverage.

"As we searched the Morningstar database we found many more in that elite coverage [group] that once had coverage but haven't been covered in five or more years," Mr. Snowball wrote.

He concedes that simple economics precludes Morningstar from covering funds where ownership is light and there is little demand for information.

"We're committed to covering those investments that are most relevant to investors and that hold a significant portion of industry assets," Mr. Snowball quotes Morningstar in explanation of the funds it covers.

Mr. Snowball notes that funds with under $1 billion in assets have a 1-in-30 chance of getting coverage, and that just 195 of the 5,700 (3.4%) funds with under $1 billion in assets are covered.

0
Comments

What do you think?

View comments

Most watched

INTV

Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.

INTV

Schwab's Jeff Kleintop: Prep for volatility given China trade uncertainties

China could be considered a developed market in five to seven years , according to Jeff Kleintop, chief global investment strategist, Charles Schwab.

Latest news & opinion

Advisers step up efforts to help clients manage student loan debt

As some Democrats campaign to wipe the slate clean, financial planners focus on limiting the amount students borrow.

Funding for Reg BI, other SEC advice reform efforts denied in Waters amendment

House likely to approve measure that effectively kills rule package, but it faces uphill battle in Senate

Wall Street lashes out at Sanders' plan to pay off student debt with a securities trading tax

Financial pros argue that a transaction levy will hurt mom-and-pop investors along with investment houses.

GPB paid B-Ds and reps steep commissions to sell troubled private placements

GPB paid commissions of 9.3%, or $167 million altogether, on the firm's private placements.

Give us a break, active managers say

Seven portfolio managers share their outlooks for the rest of the year, generally agreeing that it's been hard for active managers to stand out.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print