In a bid to highlight the best performances of individual funds and fund houses in each of the Nordic countries, investment consultancy Morningstar revealed the winners of its annual fund awards last week. 34 winners were selected and celebrated.
The Swedish winners were announced on Monday, followed by similar announcements in Norway and Finland on Wednesday, while the Danish winners were announced last, on Thursday. The award shows and celebrations were cancelled as local anti-coronavirus measures made celebrating on a larger scale impossible. Instead, the names of the winners were simply published on Morningstar's local websites.
To pick the year's winners, Morningstar analyzes all funds approved for commercialization in each Nordic country, both actively and passively managed. Then, Morningstar rewards funds and fund companies based on their performance and their risk-return ratio over three and five year periods.
In each of the Nordic markets, the categorization is different.
Higher-risk funds at a disadvantage
The long-standing awards ceremony aims to focus on funds and asset management companies that have excelled in generating strong returns for investors.
Although Morningstar showcases the results of the past year, the rating agency is aware that a single year's results may be based on chance.
Therefore, Morningstar also analyzes returns over three years and five years and the level of risk taken when picking the final winners. The adjustment for risk taking is more heavily weighted than in the regular Morningstar Ratings. Morningstar recognizes that higher-risk funds will struggle to reach the top, and that funds with relatively lower volatility and risk are better positioned to excel in the competition.
As a warning to investors, Morningstar stresses that the historical performance of a fund doesn't necessarily say anything about the future. Therefore, investors should always assess whether a given fund fits the desired portfolio on an individual basis.
The full method is described on the local Morningstar websites.
This post originally appeared on AM Watch.
