On 15 March, we will announce our annual Morningstar 2016 Fund Award winners. The core methodology remains the same, and as always, there will be two types of awards given: Category Awards and Fund House Awards. However, we have reduced the number of category awards given to highlight offerings in core sectors that we believe are the most relevant in helping local investors make more informed decisions and achieve a better experience.
Methodology remains the same
Although the number of awards and the categories in which they are given are changing this year, the awards retain the same methodology combining quantitative scoring with the qualitative judgment of our analyst team. They are designed to recognise strong performance during the year in question, but they do not simply reward one year returns. Indeed, the best funds over one year have all too often just gotten lucky rather than demonstrated real skill. We therefore evaluate five years of history in our awards process and it takes more than strong returns to merit consideration. We also place a heavy emphasis on risk in our calculation and our analysts look at factors such as the consistency of returns, changes to management and outsized risks that might be embedded in the portfolio. You can read the full methodology here.
New for 2016
We will give the following five category awards in 2016. This is down from 12 category awards in 2015. We have dropped awards from non-core categories such as Emerging Markets Equity and Global Bond. Where we have combined categories, as with the Asia-Pacific Equity award, each fund is still judged relative to its own category peers. After this assessment, we determine which offering from each of the combined categories has distinguished itself most versus its own category.
- Asia-Pacific Equity (Asia ex Japan Equity, Asia-Pacific ex Japan Equity, Asia-Pacific inc.Japan Equity)
- Global Equity (Includes all Global Large Cap style categories, Global Equity-Income, and Global Flex-Cap)
- Greater China Equity (China Equity and Greater China Equity)
- Singapore Equity
- Asia Bond (Asia Bond and Asia Bond – Local Currency)
Among house awards, we have maintained a single award each for Equity and Fixed Income.
In all, we think the changes will result in a clearer expression of those funds and houses that have shown the most merit in the context of the awards criteria and should ultimately help promote a better investor experience.