Academics find evidence of misclassification of bond funds by Morningstar

'Widespread problem’ researchers claim

clock • 2 min read

An academic research paper has found evidence that mutual fund managers misclassify their holdings, resulting in "pervasive misclassifications across the universe of US fixed income mutual funds by Morningstar, who relies on these reported holdings".

The paper, Don't take their word for it: The Misclassification of Bond Mutual Funds, by professors Huaizhi Chen, Lauren Cohen and Umit Gurun, claims to be the first systematic study comparing fund reported asset profiles provided by Morningstar against their actual portfolio holdings. The researchers said they had focused on the largest of intermediaries that provide data on categorisation and riskiness at the fund level, which is Morningstar. Strategic bond funds reduce risk in 2019 It found that the misclassification occurred where funds report more investment grade assets than a...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Bonds

Deep Dive: Private markets could be the future of 60/40 portfolios

Deep Dive: Private markets could be the future of 60/40 portfolios

Split between traditional and revamped model

Cristian Angeloni
clock 25 April 2025 • 5 min read
Pictet AM's Ermira Marika: Do not fear defaults in European credit

Pictet AM's Ermira Marika: Do not fear defaults in European credit

Risk misperceptions

Ermira Marika
clock 22 April 2025 • 4 min read
Deep Dive: Investors split on investment case for UK gilts as yields surge to highest in decades

Deep Dive: Investors split on investment case for UK gilts as yields surge to highest in decades

'We still see gilts as a safe bet'

Sorin Dojan
clock 11 April 2025 • 4 min read
Trustpilot