We did a fun little study comparing the average Morningstar Star Rating vs. fees on the funds. We examined all ETF companies with at least five rated funds, resulting in approximately 50 companies.
What we found would make sense: the most expensive group of funds tended to be the worst performers. But once you get rid of the most expensive quartile, the average Morningstar rating is about the same. (This has been well known for at least a decade…)
While the mega firms of Vanguard, Fidelity, and Schwab are all represented in the top 10 average rating (8-10), the top seven firms are all smaller boutiques with assets around $1 – $10 billion.
Hat tip to Anvith for the help and Morningstar for the inspiration.
