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Morningstar ratings and future performance

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  • Paul Gerrans

Abstract

Morningstar is one of the major ratings suppliers of Australian managed funds. Ratings are a convenient information source for investors. Over time the ratings methodology used by Morningstar in Australia has become more like its North American counterpart. However, Morningstar Australia uniquely retains a commitment to a qualitative dimension to their research. This paper explores the relationship between Morningstar, qualitative and quantitative ratings and future fund product performance. Results do not support predictive power in the ratings, in the relatively short periods available for analysis, using a range of commonly used performance measures.

Suggested Citation

  • Paul Gerrans, 2006. "Morningstar ratings and future performance," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(4), pages 605-628, December.
    • Handle: RePEc:bla:acctfi:v:46:y:2006:i:4:p:605-628
    DOI: 10.1111/j.1467-629X.2006.00185.x
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    References listed on IDEAS

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    Cited by:

    1. Rand Kwong Yew Low, 2018. "Vine copulas: modelling systemic risk and enhancing higher‐moment portfolio optimisation," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(S1), pages 423-463, November.
    2. Mike Dempsey, 2009. "Rankings for Australian managed funds: Contrariness and performance index failure," Journal of Asset Management, Palgrave Macmillan, vol. 10(3), pages 138-157, August.
    3. John Watson & James Delaney & Michael Dempsey & J. Wickramanayake, 2016. "Australian superannuation (pension) fund product ratings and performance: A guide for fund managers," Australian Journal of Management, Australian School of Business, vol. 41(2), pages 189-211, May.
    4. David R Gallagher & Peter A Gardner & Camille H Schmidt & Terry S Walter, 2014. "Quality investing in an Australian context," Australian Journal of Management, Australian School of Business, vol. 39(4), pages 615-643, November.
    5. Sebastian Müller & Martin Weber, 2014. "Evaluating the Rating of Stiftung Warentest: How Good Are Mutual Fund Ratings and Can They Be Improved?," European Financial Management, European Financial Management Association, vol. 20(2), pages 207-235, March.
    6. Daniel Chiew & Judy Qiu & Sirimon Treepongkaruna & Jiping Yang & Chenxiao Shi, 2019. "The predictive ability of the expected utility-entropy based fund rating approach: A comparison investigation with Morningstar ratings in US," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-22, April.
    7. Otero-González, Luis & Durán-Santomil, Pablo, 2021. "Is quantitative and qualitative information relevant for choosing mutual funds?," Journal of Business Research, Elsevier, vol. 123(C), pages 476-488.

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