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Fund Spy

8 Ratings Upgrades to Cap 2018

December was a busy month for Morningstar manager research analysts with refreshed or new ratings on 163 strategies.

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In December, Morningstar manager research analysts upgraded the Morningstar Analyst Ratings of seven funds and one separately managed account, downgraded the ratings of 10 funds and one SMA, and affirmed ratings on 127 funds and two SMAs. The team also assigned new ratings to 11 funds and four SMAs and placed three funds under review. Below are some of December’s highlights, followed by the full list of ratings changes.

Affirmed
 IShares MSCI EAFE ETF (EFA) maintained its overall Bronze rating in December and continues to offer a standout option for a diversified, market-cap-weighted, foreign-stock exchange-traded fund. It held more than 900 stocks as of December 2018, and its top 10 holdings represented 13% of portfolio assets. So, it has a diverse base to help to avoid some of the volatility caused by the market’s worst performers. The fund has struggled during sluggish markets versus some of its peers that can actively hedge risk. It also excludes stocks from Canada and emerging markets, so its long-term returns have lagged those of its foreign large-blend Morningstar Category peers, which typically hold a combined 10% allocation. But the fund’s market-cap-weighted structure provides the benefit of lower turnover and trading costs. Its 0.32% expense is also less than half of the category average 0.86% expense ratio.

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Kenneth Oshodi does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.