Academics find evidence of bond fund misclassification by Morningstar

‘Widespread problem’ researchers claim

clock • 2 min read

An academic research paper has found evidence that mutual fund managers misclassify their holdings, resulting in "pervasive misclassifications across the universe of US fixed income mutual funds by Morningstar, who relies on these reported holdings".

The paper, Don't take their word for it: The Misclassification of Bond Mutual Funds, by professors Huaizhi Chen, Lauren Cohen and Umit Gurun, claims to be the first systematic study comparing fund reported asset profiles provided by Morningstar against their actual portfolio holdings. The researchers said they had focused on the largest of intermediaries that provide data on categorisation and riskiness at the fund level, which is Morningstar. It found that the misclassification occurred where funds report more investment-grade assets than are actually held in their portfolios, making...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Fixed Income

Partner Insight: Vanguard's Fixed Income Update - Yields decline on dovish Fed rhetoric in November

Partner Insight: Vanguard's Fixed Income Update - Yields decline on dovish Fed rhetoric in November

The key themes in global bond markets over the past month.

Kunal Mehta, Head of Fixed Income Specialist Team, Vanguard, Europe and Suparna Sampath, Fixed Income Product Specialist, Vanguard, Europe
clock 01 February 2024 • 8 min read
Bond market: Forget the crystal ball and focus on the easy win

Bond market: Forget the crystal ball and focus on the easy win

Fixed income offers more value now than at any time in the last decade

Darius McDermott
clock 28 November 2023 • 5 min read
Why it pays to be nimble in the fixed interest market

Why it pays to be nimble in the fixed interest market

Agility and active management needed when 'the chips are down'

Jerry Wharton
clock 21 September 2023 • 4 min read