A Fund Analyst's Guide to Morningstar.com

Last week, my colleague David Kathman surveyed the best tools on Morningstar.com for beginning investors. This week, we'll take things a step further, looking at what Morningstar.com features our fund analysts find the most useful. Our list below focuses not just on tools for quick-and-easy filtering, but also on data lists that offer useful 10,000-foot views of our fund analyses. Individual investors in search of top-tier funds should find this list helpful, as should those interested in comparing the costs of different investment strategies or those looking for data and trends of the industry overall. Some of the tools and features we highlight are part of our Premium service, while others are free to all users.

 Fund Analyst Picks
This list, which is a key feature of Morningstar.com Premium service, includes all of the funds our analysts think are the best around. Organized by category, our Fund Analyst Picks boast experienced, shareholder-friendly management, sensible strategies, low expense ratios, and often strong long-term records. This list isn't just helpful for those starting a portfolio from scratch; it can also serve as a good reference for what you already own. In addition, digging into the individual funds on the list can show you how the category's top funds are performing, what's a reasonable expense ratio in any given category, and what picks the top managers are making.

 Morningstar Stewardship Grade Table
Besides conducting analysis on the funds' investment merits, we also take a hard look at what we call funds' stewardship--how well they serve as caretakers of shareholders' capital. To determine stewardship grades (also a Premium feature), analysts look at funds' merits in five categories: corporate culture, board quality, expenses, manager ownership and compensation, and regulatory issues. These qualities can help investors target funds with a record of putting shareholders first and steer clear of those that don't. This table presents a bird's-eye view of our findings and is useful for comparing your fund's grade against others in the industry and for identifying trends among fund shops. For example, nearly all funds from Vanguard and T. Rowe receive grades of A or B, whereas most funds from Federated and Evergreen receive grades of C or below. To read how we determined any one grade, click on the name of the fund. To read more about our methodology, review the methodology document at the top of the page.

Fund Category Returns
To get a bit of perspective on an overall category's performance and to glean performance trends among market sectors, our analysts often turn to the Fund Category Returns table, which includes all diversified and specialized mutual fund categories. (Category Returns are a free feature of Morningstar.com.) Users can rank by short- or longer-term performance. To get a feel for how a category's underlying funds are performing, click the category name. Then, if you're curious about the strategy and other features of a particular fund, you can click through to the underlying fund data.

 Cost Analyzer
As experienced investors are well aware, it costs money to buy, sell, and hold mutual funds. If you are trying to decide between two funds, it pays to evaluate how much you'll pay for each over the time frame you intend to hold them. In addition to expense ratios, our Premium Cost Analyzer tool factors in any brokerage commissions you'll pay to buy and hold a given fund. Those commissions can add up, especially if you plan to dollar-cost average (make regular contributions to the fund). Cost Analyzer is particularly valuable if you're comparing traditional index mutual funds with exchange-traded funds, the latter of which have brokerage commissions attached to them. You'll need a few extra pieces of information to use this tool, including an estimate of commissions and the expected return, but assessing the costs upfront can help you maximize your total return over the long haul.

Article Archives
When our analysts are researching a new idea or tracking what looks to be an industry trend, they often return to what they've written in the past to get a historical perspective. As an investor, you can also benefit from previous articles, as the issues you might be interested may very well be discussed in articles written a few weeks or months ago. Short Answer articles like this one discuss general investing and personal finance questions and can be found here. Fund Spys or Bond Squads, which are more focused on industry trends or fund research, can be found along the lefthand sidebar of the fund homepage. Fund Times, a weekly article highlighting the latest happenings of the fund industry, lives on the same sidebar, under the News heading.