Fundsters interested in the safety and evaluation of fixed income mutual funds may want to look at a Saturday article in the Wall Street Journal
. Jane Kim reports
on the new Morningstar
average credit rating system for bond funds. The new system, which started on September 1, places more weight than before on funds' lower-rated bond holdings.
The WSJ reports that, according to Morningstar, 43 percent of bond funds suffered a drop of one credit rating thanks to the change, and another 13 percent dropped by two. The Cavanal Hill Intermediate Bond Fund
], the Federated Real Return Bond Fund
], the Neuberger Berman Short Duration Bond Fund
] and the TCW Short Term Bond Fund
] saw their credit ratings drop the most.
Federated chief investment officer for fixed income Robert Ostrowski
senior vice president Joe Price
, Morningstar vice president of research John Rekenthaler
and Securities Litigation & Consulting Group's Craig McCann weighed in on the change.
Neil Anderson, Managing Editor
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