The Future of Mutual Fund Ratings:
Dec 17th, 2006 | Filed under: Performance, Analytics & MetricsThis article in Investment News highlights the evolving nature of fund ratings. Says Investment News:
“Mutual fund tracker Lipper Inc. is evaluating plans to overhaul its fund classification system, a move that could pose formidable competition to rival Morningstar Inc.
“The new classification system would take into account a fund’s volatility relative to its benchmark, as well as its market capitalization and style, according to those familiar with the New York-based company’s plans.”
Okay, so this isn’t rocket science. But it might represent an important step forward for the archaic methodologies used to rate mutual funds. Lipper is keeping a tight lid on things:
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[…] We have recently posted on a couple of stories regarding a new breed of “hedged” mutual funds that has emerged as US mutual fund regulators relax rules governing short-selling. In this well-timed research paper academics from the London Business School, Georgia State, Northeastern University in Boston crunch some numbers to get a handle on this phenomenon. They use data from Morningstar and Lipper (both of whom seem to be preparing for an arms race in hedge fund reporting). […]