Funds With Recent People Pillar Downgrades

The managers and analysts behind a mutual fund are some of its most important assets. That’s why the People Pillar rating is a key element of a fund’s Morningstar Medalist Rating. Here are four funds whose People ratings have been downgraded in the past year, meaning that Morningstar’s analysts have less confidence than before in the teams that run them. In each case, the fund’s Medalist Rating has also gone down.

American Funds AMCAP AMCPX

An eight-person team runs this $88 billion giant, one of the biggest funds in the large-growth Morningstar Category. Such a large management team is typical for American Funds, but in this case, there has been an unusual amount of personnel turnover. Lead principal investment officer James Terrile stepped off the fund in January 2025—the sixth manager to depart the fund since 2020. These changes have resulted in about half the strategy’s assets changing hands over that time and led to a downgrade of the People rating to Average from Above Average and the overall rating to Neutral.

Western Asset Core Bond WATFX

This fund has achieved fine long-term returns with a diversified relative value approach to fixed-income investing. In 2024, two key members of the investment team left unexpectedly. In May, comanager John Bellows, Western Asset’s head of US broad markets and the Federal Reserve policy lead, departed the firm abruptly. Bellows had been seen as a potential successor to comanager Ken Leech, who built up Western Asset and served as co-chief investment officer, but Leech himself left the firm in August amid ongoing investigations by the SEC and the Justice Department. These departures led us to downgrade this strategy’s People rating to Average from Above Average and the overall rating to Neutral.

Wasatch Core Growth WGROX

Wasatch CEO J.B. Taylor, a manager of this strategy since 1999, stepped down from both roles in January 2025 in preparation for his retirement a year later. This resulted in a downgrade of the strategy’s High People rating, but only to Above Average, since the remaining team is still strong.

Paul Lambert and Michael Valentine have been comanagers of the strategy since 2005 and 2017, respectively, and in January 2024, they took over lead manager duties from Taylor. With the support of Wasatch’s team of domestic small-cap analysts, Lambert and Valentine are in a good position to continue the fund’s excellent record. The overall Medalist Rating is Silver.

Matthews China MCHFX

Veteran portfolio managers Andrew Mattock, Winnie Chwang, and Sherwood Zhang have led this fund to fine long-term results using a quality-growth approach to Chinese stocks. However, Matthews has undergone an alarming amount of personnel turnover in the past five years, including the dismissal of three portfolio managers and an analyst in December 2024.

Although these changes have not directly affected this fund, they have had an indirect negative effect, since the managers have fewer resources to draw on from the rest of the firm. As a result, this strategy’s People rating got a downgrade to Above Average from High. The Medalist Rating dropped to Bronze from Silver, and it recently was put under review after yet another manager left the firm.

This article first appeared in the February 2025 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor by visiting this website.