Morningstar Mutual Fund Measures and Selection Model

Journal of Wealth Management, Vol. 17, No. 2, pp. 19-30, Fall 2014

Robert H. Smith School Research Paper No. RHS 2474225

12 Pages Posted: 1 Aug 2014 Last revised: 11 Mar 2016

John A. Haslem

University of Maryland - Robert H. Smith School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 30, 2014

Abstract

First, this study reviews Morningstar analytical grading measures used by investors to choose mutual funds. These measures include Morningstar star ratings, analyst ratings, total pillar ratings, upside and downside capture ratios, and stewardship ratings. Second, the study provides results of research that assesses the effectiveness of Morningstar fund grading measures. Third, a model is proposed that systematically applies selected Morningstar measures to ease investor choice of equity funds. In this case, the model is applied to Vanguard domestic actively managed equity funds, less sector funds. The effectiveness of this model is best tested using future performance of the selected Vanguard domestic actively managed equity funds over three-, five-, and 10-year periods.

Keywords: mutual funds, wealth management, Morningstar, grading measures, star ratings, analyst ratings, total pillar ratings, capture ratios. Vanguard funds, selection model

JEL Classification: G2, G23K, G28

Suggested Citation

Haslem, John A., Morningstar Mutual Fund Measures and Selection Model (July 30, 2014). Journal of Wealth Management, Vol. 17, No. 2, pp. 19-30, Fall 2014 ; Robert H. Smith School Research Paper No. RHS 2474225. Available at SSRN: https://ssrn.com/abstract=2474225

John A. Haslem (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742
United States
202-387 2025 (Phone)

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