FROM THE STREET ABOUT WALL STREET! DOES ANYONE REALLY HAVE AN ANSWER?
Morningstar Rating for Funds
As you all can see, having a ranking of three stars or less is considered a failure if you were in grade school. The highest ranking for a fund with 3 stars is 67.5%. The last I heard that was a (D) average and you could not stay in school with scores like that.
It is clear the only ranking that is acceptable and clear cut is five stars. If a fund has four stars in can still have a low score of 68% because the category is so broad. I would think any thing under the 75% or C+ is just not cutting it. So I think the four star category of MorningStar can be a bit too wide open because it covers B, C, and D+ funds.
Interesting, the Morning Star Rankings correspond greatly with the mutual scoring system that is used by Wall Street Insight.
Wall Street Insight is taking it a step further by offering some of aid to the funds that are having a tough time. To my knowledge the ranking services rank the funds only. Someone needs to help the funds that are lagging.
I can only see this as a good thing, especially if the performance of the funds substantially increase as a result of the help they get in the Wall Street Insight clinic.
The scoring system used by Wall Street Insight lines up with Morning Star in many ways. However the Wall Street Insight scoring system gives better vision because it is purely a numerical measure that needs very little interpretation, 1 is the best possible score and 99 is the worst possible score. Now that is simple to understand. Simpler is always better.
This now makes even more sense to me. Morningstar Ratings are directly in line with the WSI Mutual Fund Scoring system. So we all agree in which money managers need help. The big difference is we at WSI actually offer help to the sick non performing money managers. Who can argue with that? What good does it do to say some one is in need of help by giving them a one ore two star rating and not offer some sort of assistance.
However I am not criticizing Morningstar. They are doing a great thing with their ratings. It is a good educational tool. But at the end of the day, some one like WSI still needs to intervene in a positive way to lend a hand to the folks that are in need of help.