When David Kudla, chief investment strategist at Mainstay Capital Management, added a mutual fund that had been given a Morningstar rating of just one star to clients' portfolios last December, some called to question his decision.

"Some were appalled by it," Mr. Kudla said of his adding White Oak Select Growth (trading symbol WOGSX), which then carried Morningstar's lowest rating, to some of the financial-advisory firm's accounts. …

…Mr. Kudla says the fund's performance and rating underscore an important point: Morningstar ratings can be especially misleading at market inflection points.

"A rating based on the performance of an aggressive-growth equity fund, which includes the worst bear market since the Great Depression, was not a good indicator of how that fund was about to perform in 2009," he said. Mr. Kudla takes Morningstar ratings into consideration, but only as one factor among many. …

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