Is the Morningstar Rating System Global?
Evidence from Israel

Abstract

This study examines ratings of Israeli mutual funds specializing in the major stock indices during the December 2003–April 2007 period. They authors compare the predictive abilities of ratings provided by a local rating agency (S&P-MAALOT) with those of a Morningstar-type rating system and other alternatives. They show that the ratings of the commercial models (Morningstar and S&P-MAALOT) outperform the ratings of conventional measures (Sharpe, Jensen, and mean) and that the difference between the commercial models is statistically insignificant, despite the relative simplicity of the Morningstar model.