A mutual fund or exchange-traded fund might receive a different rating under our new ratings system than it did under our old one. We expect fund downgrades to outnumber upgrades, but we cannot definitively say until we have re-rated each strategy. Each fund we cover is scheduled for annual review on a rolling schedule, so all funds under coverage will be updated over the next 12 months.
A big reason a fund’s rating might change is because of its underlying fee structure. More expensive share classes of strategies we have rated highly are likely to see downgrades because we now rate each share class’ fees separately. (We used to rate one representative fund share class.)
The new rating also sets a higher bar for active strategies, so we expect some strategies will not clear this hurdle and will see downgrades as a result.