Skip to Content
Fund Spy

How Three Firms' Funds Stack Up on Stewardship

One holds steady, one improves, and one takes a dive.

With most portfolios still deep in the red over the past year, many investors may not view their funds' Stewardship Grades as a high priority. But whether investments are up or down, you still want to know if your fund is working for you.

We've recently updated Morningstar's Stewardship Grades for the funds that we closely follow at three well-known fund companies. In one case, we've noted some improvements in the way that the funds are caring for shareholders' capital, and in another case, we've been pleased to see the firm stay focused on serving shareholders well even as the firm's ownership has been in flux. Finally, we'll point to one firm whose stewardship seems to be deteriorating instead of improving.

When determining a fund's Stewardship Grade, we analyze five areas: corporate culture, fund board quality, fund manager incentives, fees, and regulatory history. Funds that earn high Stewardship Grades are backed by corporate cultures that are focused on serving shareholders well--not securing more sales of fund shares. These "A" stewards also have independent fund boards that do well for shareholders by negotiating lower fees, overseeing sensible funds, and closing funds that are growing too large to manage well. Funds that earn top grades for manager incentives have fund skippers that are paid to deliver strong long-term performance and also have made big investments in the funds they run. Finally, funds that get the best scores for fees and regulatory history have low expense ratios and no run-ins with industry regulators in recent years.