Morningstar Advisor - Fall 2007 - (Page 76)

Screens Finding Good Stewards By Morningstar Analysts Our new Stewardship Grades make it easier than ever to see which offerings look out for investors. If you are looking for funds that do a good job of taking care of shareholders, look no further. In September, Morningstar released new Stewardship Grades for more than 1,000 mutual funds. We toughened the grading system’s methodology. Now, it’s harder than ever to earn a good grade. The stewardship ratings, which we began publishing in 2004, are designed to help investors research, identify, and compare fund managers and fund companies that do a good job—or a poor job—of aligning their interests with those of fund shareholders. More and more advisors are using Morningstar Stewardship Grades to help decide which funds are best for their clients. As is the case with Morningstar Ratings, buy-and-sell decisions should not be made solely on a single metric like stewardship. Rather, Stewardship Grades should be used in combination with many other factors to consider when evaluating investment options. We performed this screen in Principia, but it can be easily adapted to Advisor Workstation. Let’s start by narrowing down our universe of funds to those that have high Stewardship Grades. As is the case in school, our honor roll includes only A’s and B’s. Stewardship Grade Overall > B total returns have consistently landed in their category’s top quartile. We can further refine the list to focus on funds with low expenses. and and and and % Rank Cat 3 Yr % Rank Cat 5 Yr % Rank Cat 10 Yr Audited Expense Ratio 25 25 25 1.25 , , , , Finally, we want to identify funds that are open to new investors and concentrate on the oldest share class. and and Purchase Constraints Not Special Criteria 5 5 Closed to New Invst Distinct Portfolio Next, let’s zero in on consistent performers over the long term. We want funds whose 76 Morningstar Advisor Fall 2007

Table of Contents Feed for the Digital Edition of Morningstar Advisor - Fall 2007

Morningstar Advisor Fall 2007 Features Departments Letter from the Editor Inbox 10 Years After: Developing Markets Make Progress Research Briefs Investors Should Adjust Their Home Bias Few Mutual Funds Exhibit Serial Correlation Valuating ETFs, the Equity Analyst's Way It’s All About Location See the World (Differently) The Return of the Global Flexible Investor Map of International Value Sound as a Loonie? Fair Exchange In Their Own Worlds A Good Read Putting Their Heads Together Buying Protection Scoping Out Easy-to-Use Funds Finding Good Stewards Consumer Firms Go Global Mutual Fund Analyst Picks Undervalued Stocks Most Popular Variable Annuities New at Morningstar The Whole Wide World

Morningstar Advisor - Fall 2007

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