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Fund Spy

The Big Tent That Is the Neutral Rating

There are many paths to a Neutral rating.

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We give more Neutral ratings than any other Morningstar Analyst Rating. That makes sense because a Neutral-rated fund is one where there isn't sufficient evidence to believe it will produce superior long-term risk-adjusted performance. If we rated every single fund, the Neutral camp likely would be the largest--so many funds fit into that description. The Morningstar Medalists (those rated Gold, Silver, and Bronze) are three shades of recommended funds and account for fewer than 10% of the more than 7,100 open-end funds available in the U.S. marketplace. Negative funds are not recommended. There are quite a few different flavors of Neutral, so I'll walk you through each one with some examples.

The Unknown
For a lot of funds, there's just not enough information to warrant a positive rating. New managers with no prior track records fit here, as do funds with new strategies. When we first hear about changes, we may talk with the new managers, but we can't be sure how they'll execute their strategies until we've seen a few portfolios. Even after a year or so, we still might not have much of a track record to go on.

Russel Kinnel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.