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Morningstar Upgrades Ratings of 4 Funds, Downgrades 5 in January

In January, Morningstar analysts upgraded four U.S. mutual fund ratings, downgraded five fund ratings and assigned three new ratings. The upgraded funds are:

  • Boston Partners Long/Short Equity, upgraded to Silver from Bronze, for the fund's excellent results, combined with renewed confidence in its parent firm.
  • Fidelity Overseas, upgraded to Bronze from Neutral, for the fund's consistent and well-executed process and outperformance in both up and down markets.
  • American Beacon Small Cap Value, upgraded to Bronze from Neutral, for its rigorous manager-selection process, capable subadvisor lineup, and low price tag.
  • T. Rowe Price Summit Municipal Intermediate, upgraded to Gold from Silver, for its sound strategy, experienced manager team, and focus on research and quantitative analytics.
The downgraded funds are:

  • Oppenheimer Global Opportunities, downgraded to Neutral from Bronze, because of unclear succession plans for the lead manager.
  • Franklin Floating Rate Daily Access, downgraded to Neutral from Bronze, because of lagging long-term performance.
  • FPA New Income, downgraded to Bronze from Silver, because of recent underperformance and a senior analyst departure.
  • ASTON/Montag & Caldwell Growth, downgraded to Bronze from Silver, because of concerns about the fund's underperformance.
  • T. Rowe Price Short-Term Bond, downgraded to Neutral from Silver, because of manager changes, a middling record despite the fund's relatively diverse toolkit, and an unappealing risk/reward profile.
The funds with new ratings are:

  • AllianceBernstein Select US Long/Short Portfolio, assigned a Neutral rating — particularly appealing for conservative investors, but has high fees and a short track record.
  • PIMCO Credit Absolute Return, assigned a Neutral rating — despite a decent track record and well-respected manager, questions remain about its ability to withstand volatile credit markets.
  • AQR Managed Futures Strategy, assigned a Silver rating — the fund stands out in its category for low fees and the firm's excellent stewardship of capital.
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 Jan. 31, 2015, 141 U.S. funds had a rating of Gold; 286 funds had a Silver rating; 348 funds were rated Bronze; 317 funds had a Neutral rating; and 39 funds were rated Negative. 

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