Morningstar's latest "Fund Spy" column explains a little more on how the fund raters are arriving at the new analyst ratings for mutual funds. Russel Kinnel, director of mutual fund research at the Chicago-based firm, offers some explanation for the ratings of American Funds Bond Fund of America [profile] (neutral), Ariel [profile] (bronze), Pimco Unconstrained Bond [profile] (bronze), Spartan U.S. Bond Index [profile] (bronze) and T. Rowe Price Value [profile] (neutral).

Kinnel worries that the American Funds offering "seems to be less than the sum of its parts," thanks to the ability of its six PMs to "cancel out one another's views" if they "adopt opposite views on rate-sensitivity."

For Ariel, Kinnel praises PM John Rogers' [#42 on MFWire's 2010 most influential list] "strong record" but wonders about the fund's recent swing "from mild-mannered to volatile."

Kinnel writes that the Pimco fund "hasn't done much but there is potential." He chides Fidelity for the Spartan fund's prior tracking error issues but praises the Boston Behemoth for since correcting those problems.

And as for the T. Rowe fund, Kinnel says Morningstar doesn't "have enough information to judge his [PM Mark Finn's] money-management skill," thanks to Finn's lack of prior money management experience. 

Edited by: Neil Anderson, Managing Editor


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