Morningstar's Investment compare tool

mears1

Why does Morningstar rate Legal and General investment trust C ACC higher (silver) than HSBC FTSE all world fund c class (bronze) but according to this chart from Morningstar  HSBC’s fund has  better return and costs are lower? What does BAS stand for? Please see the table below.

 Fees & Expenses

Ongoing Cost (%)	–	–

If BAS 10K were invested over a 5 year period, during which the average annual return were 5%

L&G International Index I Acc                 HSBC FTSE All-World Index C Acc                                                        GB00B2Q6HW61                                       GB00BMJJJF91
Worth after 5 Years	BAS 12,663	BAS 12,712
Total Fees Charged	BAS 89	BAS 45
Total Return After Fees	26.63%	27.12%

 

tebbins

If you go to an at least decent restaurant and order the special of the day, chef's special, house red etc., you'll probably get something at least decent.
If you google a film and look at the reviews from IMDB, Rotten Tomatoes, perhaps your favourite media outlet etc., you'll probably also get a hopefully reasonably accurate representation of what the film is like, if it's worth watching.

Fund ratings are - literally - nothing more than an advert that a fund company paid to bump that fund up the fund platform's ratings. Morningstar is a media company paid by the investment industry to advertise its wares, it is not paid by you to recommend funds to you.

mears1

Oh! Great analogy!

Thrugelmir

Not just performance. 

Research Methodology: The Five Pillars

Morningstar evaluates funds based on five key pillars ”Process, Performance, People, Parent, and Price”which its analysts believe lead to funds that are more likely to outperform over the long term on a risk-adjusted basis.

Process: What is the fund's strategy and does management have a competitive advantage enabling it to execute the process well and consistently over time?

Performance: Is the fund's performance pattern logical given its process? Has the fund earned its keep with strong risk-adjusted returns over relevant time periods?

People: What is Morningstar's assessment of the manager's talent, tenure, and resources?

Parent: What priorities prevail at the firm? Stewardship or salesmanship?

Price: Is the fund a good value proposition compared with similar funds sold through similar channels?

The approach notably puts only partial weight on past performance and backward-looking risk measures and does not dismiss funds that have underperformed or have limited track records. Analysts consider numeric and qualitative factors, but the ultimate view on the individual pillars and how they come together is driven by the analyst's overall assessment and overseen by an Analyst Ratings Committee. The approach serves not as a formula but as a robust analytical framework ensuring consistency across Morningstar's global coverage universe.

As is often said on this forum. Perform your own in depth research and due diligence. 

£44 of charges per £10k (initially invested adds) up if you've a large 6 figure sum invested. That's over £2k on £500k. 

Audaxer

mears1 said:

Why does Morningstar rate Legal and General investment trust C ACC higher (silver) than HSBC FTSE all world fund c class (bronze) but according to this chart from Morningstar  HSBC’s fund has  better return and costs are lower? What does BAS stand for? Please see the table below.

 Fees & Expenses

Ongoing Cost (%)	–	–

If BAS 10K were invested over a 5 year period, during which the average annual return were 5%

L&G International Index I Acc                 HSBC FTSE All-World Index C Acc                                                        GB00B2Q6HW61                                       GB00BMJJJF91
Worth after 5 Years	BAS 12,663	BAS 12,712
Total Fees Charged	BAS 89	BAS 45
Total Return After Fees	26.63%	27.12%

 

These figures are only examples showing the effect of the costs of each fund IF the annual returns of both funds were 5% per year over 5 years.

The funds actual annualised returns after costs for the last 5 years are:
L&G International Index I Acc - 13.66%
HSBC FTSE All-World Index C Acc - 12.89%

So despite slightly higher fees, the L&G fund has had higher returns after deduction of costs over the last 5 years.  The L&G fund also has a history going back to 2008, whereas the HSBC fund has only been around since 2014. 

These both may be reasons why the L&G fund has a higher rating. 

Alexland

mears1 said:

What does BAS stand for? Please see the table below.

My guess it's the BASe currency, anyway it's just showing growth on 10k

It's best to ignore star ratings, crowns and wealth lists when selecting funds and do your own research.

tebbins said:

If you go to an at least decent restaurant and order the special of the day, chef's special, house red etc., you'll probably get something at least decent.

I always assumed they would give you whatever food was highest margin or about to hit it's use by date.

Audaxer said:

So despite slightly higher fees, the L&G fund has had higher returns after deduction of costs over the last 5 years.  The L&G fund also has a history going back to 2008, whereas the HSBC fund has only been around since 2014.

L&G International delivered more as it's geographic mandate doesn't generally include UK or Emerging Markets which happen to have done relatively poorly in recent years. As such it would be fairer to compare L&G International to the Vanguard Developed World ex-UK fund which has delivered an average of about 0.5% more over each of the past 10 years.

Audaxer

Alexland said:

mears1 said:

What does BAS stand for? Please see the table below.

My guess it's the BASe currency, anyway it's just showing growth on 10k

It's best to ignore star ratings, crowns and wealth lists when selecting funds and do your own research.

tebbins said:

If you go to an at least decent restaurant and order the special of the day, chef's special, house red etc., you'll probably get something at least decent.

I always assumed they would give you whatever food was highest margin or about to hit it's use by date.

Audaxer said:

So despite slightly higher fees, the L&G fund has had higher returns after deduction of costs over the last 5 years.  The L&G fund also has a history going back to 2008, whereas the HSBC fund has only been around since 2014.

L&G International delivered more as it's geographic mandate doesn't generally include UK or Emerging Markets which happen to have done relatively poorly in recent years. As such it would be fairer to compare L&G International to the Vanguard Developed World ex-UK fund which has delivered an average of about 0.5% more over each of the past 10 years.

It was the original poster that was comparing L&G International Index I Acc to HSBC FTSE All-World Index C Acc, and had come to the wrong conclusion that the HSBC fund had better returns over the past 5 years. I was just explaining that the L&G fund had slightly higher returns, which may have been at least part of the reason for the higher rating.

Alexland

Audaxer said:
I was just explaining that the L&G fund had slightly higher returns, which may have been at least part of the reason for the higher rating.

To be fair to them their ratings aren't as crude as just giving lots of stars and crowns to whichever fund has done well recently regardless of differences in mandate. Anyway I think we can agree it's all nonsense anyway so not worth thinking about too much.