Rating the Raters - a Closer Look at Morningstar Stock and Mutual Fund Picks
Who rates the raters?
I thought it would be interesting to take a close look at the picks made on Morningstar.com since the beginning of 2009. Morningstar offers both free and premium services. This analysis refers only to the free advice investors could obtain from the various columnists.
If an investor followed every Morningstar stock pick over the last year and a half, he would have scratched out a slight premium to the market return. However, the mutual fund picks failed to deliver any value above their benchmark indexes. This is surprising since mutual fund research is Morningstar’s bread and butter.
Stock Picks
- Out of 529 picks, 287 generated a positive return and 242 generated a negative return.
- Generated a total average return of 6% and a median return of 3%.
- 282 performed better than the LikeAssets Benchmark, and 247 performed worse.
- Outperformed the LikeAssets Benchmark, with an average LikeAssets Score of 4%.
Total Return of Morningstar.com Stock Picks since January 2009
| Number of Picks | Average Return | Median Return | |
|---|---|---|---|
| All | 529 | 6% | 3% |
| Positive | 287 | 27% | 17% |
| Negative | 242 | -18% | -15% |
LikeAssets Score of Morningstar.com Stock Picks since January 2009
| Number of Picks | Average LikeAssets Score | Median LikeAssets Score | |
|---|---|---|---|
| All | 529 | 4% | 2% |
| Positive | 282 | 23% | 14% |
| Negative | 247 | -18% | -14% |
Mutual Fund Picks
- Out of 528 picks, 351 generated a positive return and 177 generated a negative return.
- Generated a total average return of 6% and a median return of 4%.
- 269 performed better than the LikeAssets Benchmark, and 259 performed worse.
- Total return was the same as the LikeAssets Benchmark, with an average LikeAssets Score of 0%.
Total Return of Morningstar.com Mutual Fund Picks since January 2009
| Number of Picks | Average Return | Median Return | |
|---|---|---|---|
| All | 528 | 6% | 4% |
| Positive | 351 | 12% | 8% |
| Negative | 177 | -6% | -5% |
LikeAssets Score of Morningstar.com Mutual Fund Picks since January 2009
| Number of Picks | Average LikeAssets Score | Median LikeAssets Score | |
|---|---|---|---|
| All | 528 | 0% | 0% |
| Positive | 269 | 6% | 3% |
| Negative | 259 | -6% | -3% |
Contributors
Since the site has a number of contributors, I tried to determine if anyone was clearly and consistently a winner. I looked at the nine contributors that had made at least 50 recommendations over the time frame.
- Six of the contributors delivered performance equal to or less than the LikeAssets Benchmark while three outperformed it.
- Russell Kinnel’s mutual fund selections generated a score of 3%.
- Gregory Warren’s stock selections generated a score of 4%.
Morningstar.com Contributors since January 2009
| Type of Picks | Number of Picks | Average LikeAssets Score | |
|---|---|---|---|
| Gregory Warren | Stocks | 54 | 4% |
| Russell Kinnel | Mutual Funds | 92 | 3% |
| Jeremy Glaser | Stocks | 165 | 1% |
| Christine Benz | Mutual Funds | 99 | 0% |
| David Kathman | Mutual Funds | 98 | 0% |
| Ultimate Stock Pickers Team | Stocks | 95 | 0% |
| John Gabriel | ETFs | 116 | -1% |
| Mike Taggart | Stocks | 55 | -2% |
| Patricia Oey | ETFs | 61 | -4% |
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