The Investors Mutual Future Leaders and Australian Smaller Companies strategies were both downgraded to recommended from highly recommended.
"Investors Mutual's shift down from highly recommended to recommended was because of questions about ongoing team stability following personnel changes from 2006-10," Morningstar's report said.
Morningstar also downgraded the recommendations on EQT/SG Hiscock and Australian Ethical's smaller companies strategies to avoid.
Smaller companies strategies offered by Pengana, Perennial, UBS, ING, Hyperion and Aberdeen were upgraded by Morningstar due to the research house's greater conviction in the team and investment process of the managers.
Pengana's strategy was upgraded to highly recommended from recommended.
"We upgraded Pengana because of our growing confidence in the leadership and skills of portfolio managers Steve Black and Ed Prendergast, intuitive investors who are among the best stock pickers in the business," the report said.
Perennial, UBS and Hyperion's strategies were upgraded to recommended, while Aberdeen and ING's strategies were upgraded to investment grade.
