A year ago, Morningstar introduced its forward-looking analyst ratings system for the mutual funds it covers in the United States.

At the time, Karen Dolan, Morningstar's director of fund analysis, said that the star ratings are a good measure of risk-adjusted performance over the long haul and that the analyst ratings can complement the stars rating well. Last week, the Chicago-based research shop shared its initial assessment of the industry using the "rather limited data" it has gathered since last November.

Rewind to November 2011.

That's when Morningtar initially rolled out its predictive ratings that scored funds on a five-point scale from "Gold" to "Negative." This rating is in addition to its flagship five-star ratings, which look at past performance, as measured by risk-adjusted returns.

In the "new" system, funds are rated either Gold, Silver, Bronze, Neutral or Negative, with a fund's overall rating reflecting a combination of assessments on what Morningstar calls its five pillars: People (the fund's managers); Process (the fund's strategy); Parent (the fund's parent company); Performance (risk-adjusted returns); Price (the fund's expense ratio).

The research shop began rating some 350 funds on the "new" scale and Morningstar analysts now assign more than 1,100 Analyst Ratings to funds: 191 have Gold ratings, 254 Silver, and 304 Bronze for a total of 749 Morningstar "medalists." Morningstar also covers 303 Neutral- and 50 Negative-rated funds, as of Nov. 16.

To date, Russel Kinnel, Morningstar's director of mutual fund research, said that: "Using funds that were in the initial launch on Nov. 15, 2011, and assuming they didn't change since then, we see positive signs but it is still pretty noisy."

Specifically, Kinnel noted there were only 12 Negative-rated funds last November. Today, that number has ballooned to 67 Negative-rated funds.

When Morningstar compared all rated funds versus their appropriate category benchmark (i.e. the Russell 2000 Growth for small-cap growth funds) 54% of Gold-rated funds beat their respective benchmark through Nov. 15, 55% of Silver funds beat their category benchmark, 53% of Bronze funds beat the category benchmark, 47% of Neutral funds beat their category benchmark, and 58% of Negative-rated funds beat their benchmark, according to Kinnel.

Also, Kinnel said that when the firm compared funds with their primary benchmarks (i.e. the Standard & Poor's 500 for U.S. stock funds, MSCI EAFE Index for foreign equity funds, Barclays U.S. Aggregate Bond for taxable bond funds, and the Barclays Municipal Index for municipal bond funds) Morningstar found that 50% of Gold-rated funds beat their benchmark, while 63% of Silver beat their benchmark, 47% of Bronze-rated funds beat their benchmark, 45% of Neutral-rated funds beat their benchmark, and 17% of Negative-rated funds beat their benchmark.

There is indeed "noise" when Silver beats Gold, and there are more Negative-rated funds now than a year earlier.

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