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No Ratings Downgrades for November

Nevertheless, it was a busy month for Morningstar Analyst Ratings.

Securities In This Article
Champlain Small Company Adv
Fidelity Government Income
Fidelity Mortgage Securities
DWS CROCI International S
Champlain Mid Cap Adv

Morningstar manager research analysts were busy in November, taking well over 200 U.S.-domiciled funds through the team's North American and global ratings committees. In total, we reaffirmed our views on 125 funds, upgraded 10 funds, and put seven funds under review. It was an unusual month in that no fund saw a downgrade in its rating, though three of the 61 funds newly brought under coverage received inaugural Morningstar Analyst Ratings of Negative. Below, we highlight some of the more noteworthy changes, and a table at the end summarizes all of the rating changes and additions.


We cover over 1,700 mutual funds and exchange-traded funds sold in the United States, and of those, less than 10% receive Analyst Ratings of Gold. It's notable, then, that we upgraded two funds to Gold last month. Both were from Vermont-based Champlain Investment Partners:

Portfolio manager, CIO, and firm co-founder Scott Brayman leads the charge at both funds, which were launched in 2004 and 2008, respectively. Despite the retirement of two longtime members in late 2016, Brayman's supporting team is strong, averaging more than 15 years' industry experience. For both funds, the tenured team singles out companies that feature superior relative growth, high returns on equity, low debt, strong and predictable earnings, capable management, and stable business models.

The team's valuation focus and quality bias can hold the funds back in more speculative bull markets, but largely by holding up well in market downturns, both funds outpaced their small-growth and mid-cap growth peers since their respective inceptions through the end of November 2017. Champlain Small Company has been closed to new investors since 2007, and Champlain Mid Cap closed to new investors in October 2017.

Under Review

We put funds under review whenever a change occurs that we believe could affect a fund's Analyst Rating or any of the five pillar scores that underlie the rating. For example, we put both of the Highland funds that we have under coverage--

At the end of November, a Texas arbitration panel resolved a dispute between a former Highland Capital portfolio manager and the firm's management, according to media reports. The litigation and the panel's reported findings raise questions about Highland's corporate culture and stewardship of client capital. As such, we put the Highland Funds' Parent Pillar rating under review. Highland Funds' previous Parent rating was Neutral. After we have re-evaluated Highland's Parent rating, we will update the funds' Analyst Ratings.

We strive to quickly update our ratings after we put them under review, and so far, three funds have come out of that status in early December.

We ultimately downgraded

New Ratings

The slate of newly rated funds included three Negative ratings; each of these funds faces hurdles that make them likely to fall behind their peers and relevant indexes over the long term. Both

Morningstar analysts Chris Franz, Tayfun Icten, Sarah Bush, Andrew Daniels, and George Georgiev contributed to this article.

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About the Author

Janet Yang Rohr

Director, Multi-Asset Alternatives, Manager Research
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Janet Yang Rohr, CFA, is director of multi-asset and alternative strategies for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She is responsible for Morningstar Analyst Rating assignments for multi-asset and alternative strategies globally and oversees a team of analysts who cover these strategies. She also covers a variety of asset-allocation strategies, including target-date funds and 529 college-savings plans from John Hancock, State Street Global Advisors, BlackRock, and other asset managers.

Yang Rohr was a strategist, senior analyst, and director of Morningstar's multi-asset strategies manager research team before being appointed to her current role in 2016. Before joining Morningstar in 2010, Yang was vice president and investment product manager for multimanager funds and solutions as well as target-date funds for Northern Trust Global Investments in Chicago. She also served as a manager research analyst for Aon Investment Consulting, where she specialized in manager due diligence and the development of the practice's quantitative research process.

Yang Rohr holds a bachelor's degree in English and economics from Northwestern University and a master's degree in business administration, with concentrations in finance and entrepreneurship, from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. In 2014, Institutional Investor magazine named Yang among its Rising Stars of Mutual Funds.

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