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How Morningstar picks fund winners

How does Morningstar decide who deserves awards for fund management? Director of Manager Research Christopher Davis explains the process.

Jess Morgan 27 November, 2015 | 6:00PM
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Jess Chapman: Jess Chapman for Morningstar.ca. I'm here with Christopher Davis, our Director of Manager Research.

Chris, you're presenting quite a few awards tonight. Why don't you tell us about how the manager research team decides who wins?

Christopher Davis: Well, I mean, it's pretty simple. We start just with the funds that we recommend, and the reason for that is we want Managers of the Year to be really good long-term performers. So, if we recommend the fund, it's our long-term stamp of approval. So that's where we start. We obviously look for funds that have had really good years, so that limits the field quite a bit, and then we really start splitting hairs because often we're dealing with very best of the best this year, and we're looking for funds that have laid the foundation for this year's success for quite some time. We don't just want it to be one-off sort of events.

Chapman: Are there any trends you noticed in the winners of the major fund awards this year?

Davis: Well, a lot of them won by staying out of trouble. It was a pretty difficult year in most markets. In fixed-income, if you've invested in Canadian bonds, you were surprised by the interest rate cuts, and if you've invested in the U.S., you were surprised there weren't any interest rate hikes at all. We had troubles in the economy, people were worried about China. It seems like it was a long time ago, but we were worried about Greece leaving the euro, and the currencies have been all over the place. So, it was quite a challenging year to navigate.

Chapman: It was a very rough year all over the markets, but we're very proud to honor these fund managers this year. Chris, thanks very much.

Davis: Thank you.

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About Author

Jess Morgan

Jess Morgan  Jess Morgan is the associate editor of Morningstar Canada’s website. She began her career as a television producer and freelance writer, often making appearances on TV and radio as a commentator on politics and culture. She holds a BA in communications from the University of Winnipeg and a diploma in Creative Communications from Red River College.

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