Morningstar has changed its methodology for rating closed-ended funds, with the aim of making it easier for investors to compare risk-adjusted performance against open-ended equivalents.
The ratings agency is now using net asset value to determine a fund's rating rather than the market closing price. It is also using its own categories to compare funds, where previously it used the Association of Investment Companies sectors. This change will make analysis more relevant, by comparing funds against peers from both the open-ended and closed-ended spheres, as well as exchange-traded funds. "The changes to our closed-end fund rating methodology are intended to assist advisers in their whole-of-market proposition", said Jackie Beard, director of closed-end fund researc...
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