Amid research that mutual funds with good Morningstar stewardship grades tend to outperform funds with poor Stewardship grades, Morningstar has toughened those grades. Morningstar has just released new stewardship grades for more than 1,000 funds and plans to add to the coverage in the ensuing months.
Morningstar is not changing the basic structure of the stewardship grade. Fund analysts still will subjectively assign a grade to a fund by evaluating corporate culture, board quality, fees, manager incentives and regulatory history. But changes will be made to the underlying criteria used to evaluate the categories.