M* Offers Parenting 101
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Wednesday, September 19, 2012

M* Offers Parenting 101

It's not every day the MFWire gets to reference Leo Tolstoy's Anna Karenina but we get to today, thanks to a Morningstar Fund Spy column.

This week's column, written by Michael Herbst, delves into the "Parent" pillar Morningstar uses to rate funds. Herbst evokes the Russian novelist's famous opening line "Happy families are all alike; every unhappy family is unhappy in its own way" to show how different problems at a fund's parent company could lead to a poor score in the pillar.

The column does a good job of clearing up an aspect of Morningstar's rating system that might otherwise be somewhat murky.

The column tells fundsters exactly how to use the pillar, saying it points out "red flags such as organizational instability, low manager investment or high fees."

Other possible issues, laid out in charts, include manager retention rates and average manager tenure.

For more information, including a chart showing stats from funds with positive and negative "Parent" pillars, read the original article.

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