Morningstar Performance Data

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YikesHighFees
Posts: 19
Joined: Mon Jan 22, 2018 5:26 pm

Morningstar Performance Data

Post by YikesHighFees » Fri Mar 16, 2018 6:34 am

Hello all,

Can someone please clarify the difference between growth of 10000 and trailing total returns in Morningstar performance data? Growth of 10000 gives me each calendar year but trailing total returns appears to be from the current day so '1 Year' today would be March 2017 to March 2018. This number is a couple of % points lower than growth of 10000 for 2017. If I am comparing funds to make a purchase decision, which is the best statistic to use? Does it even matter as long as I use the same stat for funds being compared? Thanks!

jplatzer
Posts: 9
Joined: Fri Mar 02, 2018 10:24 am

Re: Morningstar Performance Data

Post by jplatzer » Sat Mar 17, 2018 7:36 am

I don't think it matters as long as you are consistent in whichever measure you use. Either way, these returns represent the past performance of the funds and there is no guarantee these same returns will be earned in the future.

I think the general Bogleheads consensus would be that it's more important to focus on keeping fees as low as possible and getting the right asset allocation for your age and situation. From my perspective, it's more important to have the right exposures at the right price than choosing a specific fund. I wouldn't bother investing in a large cap US mutual fund when I can get the same US exposure through the S&P 500 Index for 0.03%. We all want to believe that mutual funds can generate higher returns than the index but over long periods of time (such as investing for retirement), most actively managed funds will underperform their benchmark index.

S&P does a study that shows this here: https://us.spindices.com/spiva/#/reports.

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ruralavalon
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Location: Illinois

Re: Morningstar Performance Data

Post by ruralavalon » Sat Mar 17, 2018 8:05 am

YikesHighFees wrote:
Fri Mar 16, 2018 6:34 am
Hello all,

Can someone please clarify the difference between growth of 10000 and trailing total returns in Morningstar performance data? Growth of 10000 gives me each calendar year but trailing total returns appears to be from the current day so '1 Year' today would be March 2017 to March 2018. This number is a couple of % points lower than growth of 10000 for 2017. If I am comparing funds to make a purchase decision, which is the best statistic to use? Does it even matter as long as I use the same stat for funds being compared? Thanks!
When comparing funds always compare funds of the same type.

In comparing funds to make a purchase decision the best statistic to use is the expense ratiio.

In selecting funds to use strive for a combination of broad diversification (to decrease risk) and low expense ratios (to increase your net return). Other important statistics include turnover rate, and tax-efficiency if using a taxable account.

Past performance, especially recent past performance, is not a good guide in fund selection. The "growth of $10k" graph is growth of share price net of expenses, with dividends reinvested.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

YikesHighFees
Posts: 19
Joined: Mon Jan 22, 2018 5:26 pm

Re: Morningstar Performance Data

Post by YikesHighFees » Sun Mar 18, 2018 8:46 am

Thanks for the replies. Doesn't performance data on Morningstar take into account expense ratio, as in the proof is in the pudding? If fund A has a higher expense ratio but better performance history than fund B with lower expense but lower returns, it seems fund A is the better choice. Morningstar has a multitude of performance stats. Total returns by calendar years, trailing returns from current date back by various time frames, growth of 10,000 by calendar year. There seem to be different stats for ETF's such as annual returns showing price and NAV. I'm using SELCX and SCHX for this exercise. I know that advisor fees are not factored into these stats because my portfolio on Morningstar shows 12% growth in 2017 whereas my actual portfolio statement shows 16% which are calculated before fees are taken out. Very misleading! Anyway, just looking for the best performance stat by calendar year. Thanks!

GLState
Posts: 133
Joined: Wed Feb 15, 2017 10:38 am

Re: Morningstar Performance Data

Post by GLState » Sun Mar 18, 2018 10:30 am

You're selecting funds based on past performance. When we buy a fund or stock, we are buying future performance, not the past. The SEC warns us that "past performance does not necessarily predict future results".
https://www.sec.gov/fast-answers/answersmperfhtm.html

Morningstar has found that expense ratios are a good predictor of future performance... "Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile."
http://news.morningstar.com/articlenet/ ... ?id=347327

Yes... morningstar (and most data you'll find) takes into account the expense ratios when calculating returns. You can't buy past returns today! Advisor fees and loads (if any) are not taken into account as these costs are not the same for each investor.

YikesHighFees
Posts: 19
Joined: Mon Jan 22, 2018 5:26 pm

Re: Morningstar Performance Data

Post by YikesHighFees » Sun Mar 18, 2018 6:27 pm

I created a 'portfolio' in Morningstar and added the fund symbols, percentage each holds in my actual portfolio, and the number of shares I currently have. When I run performance on it, annual performance for 2017 is 11.82 whereas my actual statement shows 16.51. My advisor fees for 2017 were 5% of my growth for 2017 so my actual is close to what Morningstar reports. But Morningstar doesn't know what mt fees are. Can anyone offer a possible explanation as to why my statement is reporting about 5% higher than Morningstar? Thanks!

TG2
Posts: 192
Joined: Sat Nov 25, 2017 6:50 pm

Re: Morningstar Performance Data

Post by TG2 » Sun Mar 18, 2018 7:38 pm

YikesHighFees wrote:
Sun Mar 18, 2018 6:27 pm
I created a 'portfolio' in Morningstar and added the fund symbols, percentage each holds in my actual portfolio, and the number of shares I currently have. When I run performance on it, annual performance for 2017 is 11.82 whereas my actual statement shows 16.51. My advisor fees for 2017 were 5% of my growth for 2017 so my actual is close to what Morningstar reports. But Morningstar doesn't know what mt fees are. Can anyone offer a possible explanation as to why my statement is reporting about 5% higher than Morningstar? Thanks!
I'm missing something. Did you create the portfolio now and are trying to look back as a comparison, or did you create the portfolio back then and are wondering why the big difference? If you created it now is your cost basis correct and did you account for dividends and distributions? Did you input original transactions and prices? I am lost on what you are trying to do.

YikesHighFees
Posts: 19
Joined: Mon Jan 22, 2018 5:26 pm

Re: Morningstar Performance Data

Post by YikesHighFees » Sun Mar 18, 2018 8:20 pm

I created the portfolio now to look back to compare. At first I just added the symbols and percentages of each. I didn't add number of shares. I was under the impression that Morningstar would look at the growth of each fund for the year, regardless of how many shares or my cost basis. I am not certain how or if Morningstar performance deals with dividends and captial gain distributions. Do they assume reinvestment into the smae fund? I suppose what may have happened is that the folks managing my portfolio may have sold some shares of some funds and purchased shares of others for rebalancing and perhaps that boosted my returns.

TG2
Posts: 192
Joined: Sat Nov 25, 2017 6:50 pm

Re: Morningstar Performance Data

Post by TG2 » Sun Mar 18, 2018 8:35 pm

YikesHighFees wrote:
Sun Mar 18, 2018 8:20 pm
I created the portfolio now to look back to compare. At first I just added the symbols and percentages of each. I didn't add number of shares. I was under the impression that Morningstar would look at the growth of each fund for the year, regardless of how many shares or my cost basis. I am not certain how or if Morningstar performance deals with dividends and captial gain distributions. Do they assume reinvestment into the smae fund? I suppose what may have happened is that the folks managing my portfolio may have sold some shares of some funds and purchased shares of others for rebalancing and perhaps that boosted my returns.
If you are that interested, you should go back and add your transactions from your statements into the Morningstar portfolio and see what happens. You can add previous transactions (dates, shares, prices) for each security. Right now you are comparing apples and oranges. Different numbers will give different results.

michaellarimore
Posts: 20
Joined: Wed Oct 01, 2008 8:19 pm

Re: Morningstar Performance Data

Post by michaellarimore » Thu Jun 14, 2018 10:05 am

I began to say that-
I am still not clear on the difference between the Morningstar number "Growth of 10,000 - YTD" and "Trailing Total Returns - YTD".
For example- VBTLX
Growth of 10,000 - YTD is -1.68
Trailing Total Returns - YTD is -2.24
That's a significant difference; I'd really like to know why the different numbers?

Then i saw that the as-of date on the "Growth of 10,000" is 5/31/2018 and the as-of date on "Trailing Total Returns" is 6/13/2018 :oops: ...
Two different points in time - Growth of 10,000 is end of previous month and Trailing Total Returns is last close date.

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