Morningstar hikes MFS target-date rating, drops 3 firms' fund families
By Robert Steyer | November 8, 2012 4:20 pm
Morningstar has raised its rating on the MFS Lifetime Target Date Fund Series to above average from average, and it has dropped its rating entirely of target-date families from OppenheimerFunds, Putnam Investments and DWS Investments, confirmed Laura Lutton, a director in Morningstar's mutual funds research group.
The raised rating on the MFS fund series was based primarily on growing assets in a less-expensive asset class offered by the money manager, Ms. Lutton said in an interview. Morningstar issues quarterly ratings of target-date funds, with categories of top, above average, average, below average and bottom.
Morningstar uses five criteria in its rankings — fees, performance, portfolio quality, fund managers and the fund's parent. The firm analyzes open-end mutual fund target-date funds; it doesn't track custom target-date funds.
Ms. Lutton said Morningstar dropped coverage of the Putnam and DWS families because their assets were too small — $183 million for Putnam and $534 million for DWS, both as of Sept. 30. Putnam had been rated below average and DWS had been rated in the bottom category.
Morningstar discontinued coverage of the OppenheimerFunds target-date family because its seven target-date funds are being closed, Ms. Lutton said. According to filings by OppenheimerFunds with the SEC, the target-date assets will be transferred to three balanced funds.
Ms. Lutton said the OppenheimerFunds family had $540 million in assets as of Sept. 30 and had been ranked in the bottom category.
Morningstar now provides quarterly ratings for 22 target-date fund families.