Screening mutual funds on-line with Morningstar.com
Summary: In this article, The Skilled Investor discusses how to screen mutual funds on-line using our seven scientifically based mutual fund screening criteria. This article focuses on using the free mutual fund screener and database available at Morningstar.com.
In a previous article, The Skilled Investor has discussed minimum requirements for using on-line screeners and fund databases to screen automatically the thousands of mutual funds and hundreds of exchange traded funds (ETFs) that are available. (See: On-line screening of mutual funds and ETFs: Minimum Requirements). That article concluded that free fund screeners and databases offered by Morningstar.com and IndexUniverse.com are sufficient to allow you to screen mutual funds, index funds, and ETFs and to use our scientific fund selection criteria. Because we found adequate free screeners to implement our criteria, paying a subscription to any website to obtain more advanced functionality is not necessary.
Note that there is no business arrangement of any kind between The Skilled Investor and Morningstar.com or IndexUniverse.com. These websites simply meet the requirements laid out in our article on minimum requirements.
A related article also discussed seven scientifically derived fund screening criteria: 1) minimum management expenses, 2) minimum turnover, 3) zero sales charges, loads and marketing fees, 4) avoidance of very large funds with higher trading costs, 5) avoidance of immature funds, 6) a minimally sufficient asset base over which to spread required fund expenses, and 7) the exclusion only of funds with very poor historical performance records. (See: Scientific mutual fund and ETF screening criteria: a summary)
You can find Morningstar.com’s free screener at: http://www.morningstar.com/ Click on “Funds” in the horizontal tabs, look for “Morningstar Tools,” and click on “Mutual Fund Screener.” When this article was published in early February of 2007, the direct URL address was: http://screen.morningstar.com/FundSelector.html?fsection=ToolScreener
Obviously, the Morningstar.com site will offer enticements that you should deal with as you please. In the opinion of The Skilled Investor, Morningstar.com is valuable primarily because of its relatively complete mutual fund database. However, as any astute consumer in the financial marketplace grows to understand, there usually are pluses and minuses with any financial service. Of particular concern to The Skilled Investor is the widespread and questionable industry and consumer usage of Morningstar’s five-star Star Rating system. However, this subject is beyond the scope of this article. For more see: Investment astrology – should you pick investments according to [...]