“This excess performance is statistically significant”, Morningstar added.
“The data shows that Morningstar’s qualitative and assignment of positive ratings has proved effective at picking out the winners.”
Elsewhere, the ratings agency urged the FCA to clamp down on complicated fee structures in the industry.
It said the lack of transparency around fund charges and the absence of credible competition from passive funds, coupled with a severe lack of knowledge among investors, were the key flaws within the market.
Instead, it recommended the introduction of a single ‘all-in’ charge on funds which could be broken down into fees for management, administration, distribution and transaction costs in an annual round-up.
Dual-pricing for funds should also be banned outright, it said, as it was “unnecessarily opaque and confusing”.
Morningstar also recommended disclosing fees and costs in pounds and pence, and explaining how fees would eat into long-term returns in percentage terms rather than fund cost ratios to help boost transparency and better serve investors.
Concluding that there was “an inherent conflict of interest in asset management” between stakeholders and investors, Morningstar said independent chairmen on boards of directors “is entirely sensible if one wants them to be anything more than a rubber stamp for the asset manager”.
