In August, Morningstar manager research analysts affirmed the Morningstar Analyst Ratings of 95 funds and two target-date series, upgraded the ratings of eight funds, downgraded the ratings of seven funds, and assigned new ratings to 48 funds. Below are some of August’s highlights, followed by the full list of ratings changes.Upgrades:The rating for PIMCO Mortgage Opportunities was raised to Silver from Bronze because of continued improvements at the firm and the fund’s reasonable fee level. Dan Hyman, who co-heads PIMCO’s agency mortgage portfolio management team, has run the fund since its 2012 inception. Hyman and team rely on PIMCO’s deep economic outlook to craft a benchmark-agnostic portfolio, which has an absolute return, Libor-based return target. Compared with peers in the nontraditional bond Mornin… Full Story

What Is a Convertible Bond?Like a regular bond, a convertible bond pays coupons, but this security gives investors an option to convert the debt into equity if the issuing company’s share price rises above a prescribed price. These hybrid securities are senior to equityholders during bankruptcy proceedings but usually subordinate to traditional bonds. Convertible bonds have different return patterns depending on how the underlying common stock has performed since the issuance. If a convertible bond's corresponding stock price is below the conversion price, it is valued like a straight bond with an out-of-the-money call option attached. As the stock price reaches or surpasses the bond's conversion price, this instrument will begin to trade in line with the stock, allowing the investors to participate in the stock’s … Full Story