Morningstar updated its quarterly ranking of large target-date fund families, raising its rating on TIAA-CREF and MassMutual, while lowering its rating on Fidelity Investments, confirmed spokeswoman Alexa Auerbach.
Morningstar's ranking features five categories — top, above average, average, below average and bottom — based on five measurements, Ms. Auerbach explained in a telephone interview.
The five categories are people, parent, performance portfolio and price. The first two measurements reflect qualitative assessments of fund management, and the other three reflect analyses of investments made and fees charged, she said.
TIAA-CREF moved to an above-average rating from average because of “a greater share of assets in its cheapest share class as well as improved target-date transparency,” according to e-mailed comments from Laura Lutton, editorial director at Morningstar. MassMutual rose to average from below average “based on the gradual improvement in its portfolio quality and performance,” she added.
Fidelity slipped to average from above average. “We lowered the rating in the parent company category because recent hiring and organization changes have not resulted in better performance, and we continue to see high manager turnover,” Ms. Lutton wrote.
Among the 21 target-date fund families in Morningstar's ranking, Vanguard, T. Rowe Price and American Funds placed in the top category while target-date funds from AllianceBernstein and OppenheimerFunds were in the bottom category.
Morningstar also said it has begun analyzing the target-date fund series from BlackRock, which debuted with an average rating.