Updated August 10, 2026. Quick answer. In Morningstar’s own research, cost beat the star rating as a predictor. Russel Kinnel, Morningstar’s director of manager research, found that low-cost funds outperformed high-cost funds in every asset class, every time period tested — and a later study measured it precisely: the cheapest quintile of U.S. equity funds succeeded three times as often as the priciest quintile.
The original finding (2010)
As reported by CBS News, Kinnel’s 2010 study compared fund performance by expense quintile across five asset classes over the five years ending March 2010. The cheapest quintile beat the priciest quintile in every single category:
| Category | Cheapest quintile (5-yr return) | Priciest quintile |
|---|---|---|
| Domestic equity | 3.35% | 2.02% |
| International equity | 6.46% | 5.25% |
| Balanced | 3.76% | 2.87% |
| Taxable bond | 5.11% | 3.82% |
| Municipal bond | 3.83% | 2.75% |
Kinnel’s own conclusion, as quoted by CBS News: “If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make a better decision.”
The follow-up: “success ratios” (2010–2015)
A later Kinnel white paper, “Predictive Power of Fees” (as reported by NAPA-Net, study period 2010-2015), measured something closer to what most investors actually care about: not just average return, but the odds a fund survives and beats its category at all — its “success ratio.” For U.S. equity funds specifically:
| Expense quintile | Success ratio |
|---|---|
| Cheapest | 62% |
| 2nd cheapest | 48% |
| Middle | 39% |
| 2nd priciest | 30% |
| Priciest | 20% |
Cheapest-quintile funds were, in Kinnel’s own words as reported by NAPA-Net, “three times as likely to succeed as the priciest quintile.” International-equity and balanced-fund categories showed the same pattern in the same study (51% vs. 21%, and 54% vs. 24%, cheapest vs. priciest respectively).
Why this matches everything else on this site
This isn’t a new argument for us — it’s the same one behind our own advisor fee calculator and advisor fee benchmark: cost compounds against you quietly, in a way that’s easy to underweight next to a flashier signal (a star rating, a glossy pitch, a strong single-year return). The mechanism is identical whether the wrapper is a mutual fund, an ETF, or an advisory fee: what you pay every year is a more reliable predictor of your outcome than almost anything else you can measure in advance. Morningstar’s own research, cited above, makes the same case about fund selection that we make about advisor selection.
Sources
“Which Is a Better Performance Predictor: Star Ratings or Expense Ratios?”, CBS News, reporting on Russel Kinnel’s 2010 Morningstar study. “Morningstar: Fund Fees a Predictor of Future Success,” NAPA-Net, February 2019, reporting on Kinnel’s “Predictive Power of Fees” white paper (Morningstar, study period 2010-2015). Morningstar.com was not directly fetchable for this page; every figure above is attributed to the secondary report that carried it.
Past performance does not guarantee future results. Not investment advice.
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