While mutual funds, index funds and ETFs can give a wide range of investment choices, it is important to remember that the goals of the industry providing these products are inherently different from your investment goals and guidance information.
From Our Investment Experts
Morningstar Ratings can destroy your nest egg. Why? Because they just don’t work. The jury has finally announced the verdict! Read two WSJ articles “The Morningstar Mirrage” and “How WSJ Did Analysis of Morningstar Ratings,” both of October 25, 2017, and David Swensen’s NYT op-ed “The Mutual Fund Merry-Go-Round” of August 13, 2011. Morningstar says that their ratings are merely awards given to funds for their past performance. They are not designed to select future winners. They are based on past total returns. It is well known that past returns don’t predict future performance. Star ratings encourage investors’ behavior of chasing past returns. This is a guaranteed way of losing money! Morningstar ratings are inconsistent and misleading. 5 Star funds from one sector can have worse returns than 3 star funds from a better performing sector. 5 Star funds could give worse future returns than even 3 Star funds. Many 5 Star funds perform worse than their sector average in the future. There is conflict of interest. Morningstar makes millions of dollars by selling their ratings to the industry, which uses the ratings ONLY for marketing. They don’t use them to manage their own investments! Want more details, or have other questions? Ask us. Our investment experts will answer all your questions!