Investment Portfolio Morningstar Ratings Wrong

TerrenceT

I have many mutual fund investments and I review things in the Investment-Portfolio view with the M* Overall Rating column displayed. One of my mutual funds (FREEX) shows a M* Overall Rating of 3 *'s in my Portfolio view. When I select Security Detail View for FREEX, then select News & Analysis (and login to Quicken as required), Quicken online shows FREEX with an overall M* rating of 5 *'s.
So, question is "Why is my Portfolio view of M* Overall Rating Different than what I find from Quicken News & Analysis online?"

Boatnmaniac

@TerrenceT - If this is something you really want and feel it would provide good value to others you can submit it as a product improvement idea.  Other users will be able to view it and if they agree with you they can then vote for it.  The Quicken Team does monitor/review product ideas posted and the more people who vote for the idea the more likely that it will at some point get added to the development plan.

Go to https://community.quicken.com/categories/product-ideas to post product ideas.  If you do post this, make sure you also vote for it.

Jim_Harman

On the Morningstar website FREEX has a rating of 3 stars, so the problem is with the News and Analysis.

TerrenceT

Thanks for the quick reply Jim! I'm glad that my Portfolio view is correct - but I do wonder how the News & Analysis site on Quicken will get fixed?

Boatnmaniac

Per Investopedia:  "The standard Morningstar star rating is backwards-looking; it tells an investor which funds have performed best over a three-, five- or 10-year period."  (https://www.investopedia.com/articles/investing/102115/how-morningstar-rates-and-ranks-mutual-funds.asp)

News and Analysis gets its information from Quicken Investing and it states there that the Morningstar rating shown there is (only?) the 3-yr average.

Investopedia also states:  "Morningstar measures risk for as many as three periods (three, five, and 10 years). These separate measures are then weighted and averaged to produce an overall measure for the fund."  (https://www.investopedia.com/terms/m/morningstarriskrating.asp).  I'm guessing that this 3/5/10 yrs weighted average is what Morningstar shows on its website.

I'm no expert on understanding and interpreting Morningstar star ratings but it does appear to me that this might not be a matter of inaccurate Morningstar ratings being reported by Quicken Investing but, rather, a matter of different time periods being reported....3 yrs for Quicken Investing vs 3/5/10 yrs average for Morningstar.com.

If my assumptions are correct, then I think I prefer seeing the star ratings from Quicken Investing.  That aligns more with what many financial advisors suggest MF investors focus on as the baseline:  Initially focus on the 3-yrs performance data...but to not disregard performance of other time periods, especially the current and 1-yr pictures...because MFs are more likely intended to be held for longer time periods than are stocks.  When the current/1-yr picture is bounced off the 3-yrs data it will give an indication of whether or not a MF is a buy opportunity or a sell opportunity.  IMO, unless one is looking to buy and hold a security for longer than 3 yrs then I think the value of 5 and 10 yrs performance data is minimal.

TerrenceT

Thanks Boatn for the reply. What you say makes sense, but fails to address the underlying concern.

The concern is that there exists an unexplained difference between the M* result for the Portfolio view and the News & Analysis view of the same fund. IMO there should be a way to make them match:

Option 1: Offer the Portfolio view option to show the 3-year M* overall rating seen in News & Analysis, or

Option 2: Have the News & Analysis contain both the M* 3-year overall and the M* Overall that matches the portfolio view.

I think I prefer both options actually, but would accept whatever is easiest to implement as a good first step.

Boatnmaniac

@TerrenceT - If this is something you really want and feel it would provide good value to others you can submit it as a product improvement idea.  Other users will be able to view it and if they agree with you they can then vote for it.  The Quicken Team does monitor/review product ideas posted and the more people who vote for the idea the more likely that it will at some point get added to the development plan.

Go to https://community.quicken.com/categories/product-ideas to post product ideas.  If you do post this, make sure you also vote for it.