Skip to Content
US Videos

3 Recently Downgraded Funds

Personnel changes, relatively high costs, and a shrinking asset base led us to re-evaluate our ratings on these funds.

3 Recently  Downgraded Funds

Susan Dziubinski: Hi, I'm Susan Dziubinski for Morningstar.com. Our fund analyst ratings are forward-looking qualitative measures representing our conviction in a fund's ability to outperform during a full market cycle. Though ratings tend to be stable, we do adjust them occasionally. We upgrade funds if some change leads us to believe that they're more likely to outperform, and we downgrade them when we think the opposite. Today, we're looking at three funds that have recently been downgraded.

Tom Nations: We recently downgraded American Century Value to Bronze from Silver for a few reasons. First, manager Michael Liss' contrarian bent led to forays into deep value names, which had been out of favor, and contribute to the fund's recent performance slump. There's also been turnover at the analyst level, and the fund's price tag, while holding steady, looks expensive relative to category peers that have consistently reduced fees. That said, there's still a reason for optimism. First, Liss is a seasoned investor that has led the strategy for over a decade now. As such, he's led the strategy through bouts of underperformance in the past and analyst turnover as well. Finally, we remain confident in Liss' proven quality value approach, which has delivered consistently superior risk-adjusted returns over full market cycles.

To view this article, become a Morningstar Basic member.

Register for Free