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Fund Spy: Morningstar Medalist Edition

Anatomy of a Neutral Analyst Rating

Strong management and a sound strategy don't always win a medal.

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Morningstar recently updated the Morningstar Analyst Rating for  Baron Asset (BARAX)--keeping its Neutral rating at Neutral. That's not headline news, but it is worth exploring further because this is not a typical case. There is a lot to like about this fund: It gets a Positive for both the People and the Process pillars of the rating. (There are five pillars overall, with the others being Performance, Parent, and Price). A strong manager employing an intelligent strategy is often the recipe for success in active management.

In fact, it is rare that a fund boasts both attributes yet ends up with a Neutral rating. Of the 607 actively managed U.S. open-end funds that score Positive on both People and Process, 96% were Morningstar Medalists. The rest, just 4%, were rated Neutral (and none were Negative). In comparison, 28% of all actively managed U.S. open-end funds that we've rated have a Neutral rating.

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