The answer is yes, although you need to do a little investigating. You may be able to save a substantial amount on your boat loan through refinancing at a lower rate. Sounds great, eh? Usually decision is as simple as it appears to be; refinance at a lower rate save money and pay your boat off faster. However there are some circumstances that probably rule out boat refinance option. If you intend to sell boat soon or your credit is substantially worse than it was when you bought boat, boat refinancing is probably not for you. However if you do not fall into those categories, boat refinancing can be a great way to save money every month.

The most critical factor in considering boat refinancing is determining what your current situation is. For example, are you trying to pay off boat as soon as possible or reduce your monthly payments? Once you have determined what you are trying to accomplish finding right boat refinancing is simple.

In 2003, New York Attorney General, Elliott Spitzer launched actions against some mutual fund companies for allowing their privileged clients to profit from improper activities such as late trading.

In aftermath of these developments, investors realize that they need more than historical performance based Morningstar Ratings to evaluate mutual funds. The Morningstar Ratings do not get at critical intangibles. How seriously does mutual fund company take its fiduciary responsibility to mutual fund investors? How aligned are interests of mutual fund manager and mutual fund company with those of mutual fund investor?

To address this need, Morningstar has embarked on a system called Fiduciary Grade. Morningstar has so far graded about 635 mutual funds, including 500 of largest ones. Morningstar plans to provide Fiduciary Grades for a total of 2000 mutual funds over time.

The Morningstar Fiduciary Grade System Basics

The Morningstar Fiduciary Grade is based on evaluation of five areas critical for mutual fund governance and mutual fund operations. Morningstar generally assigns to mutual funds points ranging from 0 (Very Poor) to 2 (Excellent) in increments of 0.5 for each of these five areas.

1. Regulatory Issues: Morningstar examines if mutual fund company has had any regulatory issues within past three years. If so, what corrective actions has mutual fund company implemented? Unlike other four areas, minimum score here can be a minus 2.

2. Board Quality: Morningstar looks for a demonstrated track record of mutual fund board protecting interests of mutual fund investors. Mutual funds get kudos if their independent directors invest in mutual funds.

3. Manager Incentives: This score is based on Morningstar’s evaluation of mutual fund ownership and compensation structure. Mutual funds where fund’s manager owns a meaningful stake in fund score high on fund ownership dimension. A compensation structure that rewards mutual fund manager for long-term mutual fund performance is favored.

4. Fees: Mutual funds are rewarded for having expense ratios lower than that of their peers and for effectively reducing their expense ratios with growth in their assets.

5. Corporate Culture: Morningstar looks for tangible evidence that mutual fund company takes its fiduciary responsibility seriously. Among factors Morningstar considers are softer issues like whether company closes mutual funds when they get too large and whether company starts trendy mutual funds to garner assets.

The points scored on each of above areas are aggregated and Fiduciary Grade is assigned based on total: A=9-10, B=7-8.5, C=5-6.5, D=3-4.5, F=2.5 or less.

How Investors Can Use Morningstar Fiduciary Grade

Here are some ways investors can use Morningstar Fiduciary Grade.

1. Buy and Hold Investors: Buy and hold mutual fund investors first need to examine how mutual funds held in their portfolios stack up on two dimensions, Morningstar Rating and Fiduciary Grade.

Mutual funds that rank favorably on both dimensions may be retained and mutual funds that rank unfavorably on both dimensions may be replaced by ones that rank favorably.

For mutual funds that rank favorably in one dimension but not in other, answer is not clear-cut. Retaining a fund with strong Morningstar Rating but lower Fiduciary Grade is a matter of personal choice. Conversely, a mutual fund’s Fiduciary Grade may be satisfactory but Morningstar Rating may be unfavorable. This may just be a case of mutual fund manager going through a temporary bad patch. Investors have to weigh these factors along with tax consequences before deciding to sell a mutual fund.