These new Morningstar quantitative ratings are hot garbage.
I’m getting negative scores for managing 10 funds and having $0 invested in my own fund.
Neither of those are true.
The fact this was released tells me M* still doesn’t realize the influence it has on the industry.
I’m getting negative scores for managing 10 funds and having $0 invested in my own fund.
Neither of those are true.
The fact this was released tells me M* still doesn’t realize the influence it has on the industry.
And that’s despite the fact there are papers documenting that changes in Morningstar’s rating methodologies have literally changed the very structure of cross-sectional returns in the market.
That’s POWER.
That’s POWER.
“But Corey, your SAI says you don’t have any money in your fund!”
First, I am an owner/operator. Different situation. Second, maybe I have it in another vehicle.
But I don’t. I literally have it in the fund. It’s just that the SAI is updated ANNUALLY.
First, I am an owner/operator. Different situation. Second, maybe I have it in another vehicle.
But I don’t. I literally have it in the fund. It’s just that the SAI is updated ANNUALLY.
“But we’re just working with the data we’ve got!”
Great. So you’re providing ratings using incorrect data.
Great. So you’re providing ratings using incorrect data.
This isn’t some unknown little website.
This is Morningstar. Morningstar is a behemoth.
Launch a fund and see what happens if you ever fall to a 2-star rating. You’re done. DONE. At least for the next 12 months.
This is Morningstar. Morningstar is a behemoth.
Launch a fund and see what happens if you ever fall to a 2-star rating. You’re done. DONE. At least for the next 12 months.
"With great power comes great responsibility.”
Act like it, Morningstar.
Act like it, Morningstar.
And unless you’re suffering from Gell-Mann amnesia, you know it’s not just these new ratings that are now suspect.
https://twitter.com/LizSimmie/status/1377764614579032065
“Why does it matter?”
Because allocators look at this stuff.
Worse, their clients look at this stuff. Lots of time it just shows up on their quarterly statement. (It shows up in my Schwab account.) And they don’t know any better.
So you get a bias driven by M* ratings.
Because allocators look at this stuff.
Worse, their clients look at this stuff. Lots of time it just shows up on their quarterly statement. (It shows up in my Schwab account.) And they don’t know any better.
So you get a bias driven by M* ratings.
“Corey, why don’t you just contact M* and tell them the data is wrong?”
First of all, I shouldn’t have to.
Second of all, this is all hidden from me because I won’t pay M* for it. The only reason I know is because a friend sent me mine.
First of all, I shouldn’t have to.
Second of all, this is all hidden from me because I won’t pay M* for it. The only reason I know is because a friend sent me mine.
So the only way to know if their rating on my fund is wrong is to pay them $10k/year, or whatever it is, so I can even see it?
Okay.
Okay.
I wonder if Morningstar analysts have skin in the game.
Where are the numbers about how much of their own money they put in the funds they rate highly?
Where are the numbers about how much of their own money they put in the funds they rate highly?
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