Vanguard dominates Morningstar passive fund ratings

Morningstar has launched its ratings service for passive funds, revealing the ratings for the 25 most popular retail tracker funds.

The qualitative research process will match that used by the firm’s active fund research by grading the funds on a scale between negative and gold, with gold the highest rating possible.

Of the 25 most popular open-ended tracker funds, from BlackRock, Vanguard, HSBC and L&G, nine received a silver rating and 14 were given a bronze rating.

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Vanguard was the stand-out winner of the initial ratings, with seven of its 12 funds receiving a silver rating, with the rest rated as bronze.

By contrast, none of the eight BlackRock tracker funds were given a rating above bronze.

The lowest rating awarded was the neutral rating given to the HSBC FTSE 100 Index Retail fund and the BlackRock Overseas Government Bond Tracker fund.

Morningstar said the funds had been rated in comparison both to the passive peers, both in open-ended and exchange-traded funds, and equivalent active funds.

The qualitative process looked at the manager and supporting research team, the investment process, the parent group, the performance and fees to judge the funds.

In addition, the passive funds were judged on their accuracy in tracking their chosen benchmark.