LB Ratings – Opinionated Ratings On Bond Mutual Funds & ETFsSeptember 25th, 2012 by Marc Prosser
Learn Bonds announced today the start of LB Ratings, a rating service designed to compete with Morningstar and Lipper. Learn Bonds seeks to be different than these rating services in the following important ways:
Fewer Ratings, Better Choices – Both Lipper and Morningstar are comprehensive rating services that cover thousands of investment choices. The intention of LB Ratings is to cover only a couple hundred choices composed of the largest bond mutual funds and ETFs, as well as the highest quality smaller funds.
Fewer Categories, Less Confusing Portfolio Management – LB Ratings believes that an individual or family should have no more than 5 mutual funds, each filling a specific purpose in the portfolio. As a result of dividing funds by purpose, LB Ratings doesn’t have even a fraction of the categories of Lipper or Morningstar.
Bias Towards No Load Funds and Funds With Low Annual Expenses – LB Ratings gives more weighting to the impact of sales loads on fund performance. LB Ratings will not rate any fund with a sales load “5 Stars”.
Bond Market Expertise & Opinions – LB Ratings focuses on how we expect the funds to perform in the future rather than past performance. Our ratings take into consideration what types of funds will do well given our expectations of interest rates, credit spreads and default rates.
David Waring, editor-in-chief said, “We have tremendous respect for Morningstar and Lipper’s mutual fund and ETF ratings. LB Ratings will not replace these great tools. However, we recognize many investors find these tools overwhelming and complicated to apply to making investment choices. We are addressing the need for a simplified product which expresses strong views as to which funds an investor should own.”
When asked how is LB Ratings different than a top 10 list, Waring responded, “Top 10 mutual fund and etf lists, tend not to be very rigorous in their evaluation process. They tend to overweight recent performance and end up being 10 hot funds. These lists are also not designed with portfolio asset allocation in mind. With LB Ratings, our goal is for an investor to end up invested in a great fund based on short and long-term performance, fees, management, interest rate and credit risk. Bottom line, all rating systems are based on developing trust. We intend to build that trust.”