In December, Morningstar analysts upgraded three U.S. mutual fund ratings, downgraded five fund ratings and assigned three new ratings.
The upgraded funds are:
- Fidelity Intermediate Bond, upgraded to Silver from Bronze, for its risk-adjusted performance versus its prospectus benchmark and peers and experienced management team.
- BlackRock Total Return, upgraded to Bronze from Neutral, for the management team's ability to meld its bottom-up insights with its macroeconomic outlook.
- Loomis Sayles Core Plus Bond, upgraded to Gold from Silver, for significant investments in quantitative tools and risk management, and lowering expenses.
The downgraded funds are:
- American Century Small Cap Value, downgraded to Neutral from Silver, because of lead manager Ben Giele's departure.
- Osterweis, downgraded to Bronze from Silver, because of lagging performance during the past market cycle.
- Neuberger Berman Genesis, downgraded to Bronze from Silver, because of growing concern about the fund's large asset base and potential liquidity issues.
- Delafield, downgraded to Bronze from Silver, because of uncertainty associated with the fund's more-volatile holdings.
- T. Rowe Price Spectrum Growth, downgraded to Bronze from Silver, because of management changes at underlying funds representing about 40 percent of this fund's assets.
Morningstar assigned new ratings to three funds in December:
- American Century Intermediate-Term Tax-Free Bond, assigned a Neutral rating — despite an experienced management team, consistent strategy, and attractive price tag, the fund hasn't delivered compelling returns.
- Deutsche Intermediate Tax/AMT Free and Deutsche Strategic High Yield Tax-Free, both assigned a Bronze rating — their seasoned management has delivered sound long-term performance while keeping volatility in check.
Morningstar’s Analyst Ratings represent the firm’s conviction in a fund's ability to outperform its peers and/or relevant benchmarks on a risk-adjusted basis over a market cycle of at least five years. As of Dec. 31, 2014, 141 U.S. funds had a rating of Gold; 281 funds had a Silver rating; 352 funds were rated Bronze; 319 funds had a Neutral rating; and 39 funds were rated Negative.
