Morningstar defends fund ratings in 13-year data study

Criticised by FCA last year

Laura Dew
clock • 2 min read

Morningstar has hit back at the Financial Conduct Authority's (FCA) claims its rated funds fail to outperform their benchmarks over the long term, presenting evidence to the contrary from a study conducted between 2002 and 2015.

In the FCA Asset Management Market Study, which was released last November, the regulator used the organisation as a case study, criticising the ratings agency for awarding positive ratings to funds that did not outperform their benchmarks. The regulator said: "Share classes awarded a Gold, Silver or Bronze (GSB) Morningstar Analyst rating do not significantly outperform their benchmarks net of charges; net of fees excess returns are statistically indistinguishable from zero over various different holding periods." In response, Jonathan Miller (pictured), director of manager research ...

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