Methodology Documents

Morningstar has conducted research on active and passive investment strategies and their associated vehicles since 1986.

This paper outlines the key assumptions and details behind our quantitative equity rating methodology.

We believe that a company's intrinsic worth results from the future cash flows it can generate. The Morningstar Rating for stocks identifies stocks trading at a discount or premium to their intrinsic worth--or fair value estimate, in Morningstar terminology.

This document describes the rationale for, and the formulas and procedures used in, calculating the Morningstar Rating for funds (commonly called the “star rating”). This methodology applies to funds receiving a star rating from Morningstar.

This paper outlines the key assumptions and details behind our quantitative equity rating methodology.

Morningstar developed the Morningstar Equity Comparables system to give investors and financial professionals an objective benchmark for comparing companies. Morningstar Equity Comparables is genuinely different to other industry classification schemes. We start from the bottom up with comparable companies, as opposed to the top down with sector definitions. For every pair of companies, we determine how similar they are–anywhere from closely comparable to distantly related based on automated analysis of the companies' own business description. We automatically analyse the text of the business description and work out whether companies are talking about similar things as they describe their businesses. Businesses described in similar terms are comparable.

The tool constructs fund-level portfolios to facilitate the advisor-led models and lineups. A flexible optimization framework is created that allows for a wide variety of optimization problem formulations.

The Morningstar Sustainability Preferences Portfolio Construction Tool creates a portfolio tracking investment policy model while allowing investors to express their unique environmental, social, and governance preferences as defined in terms of product

Morningstar Indexes' equity and bond benchmarks highlight volatility and its risks, a complex diversification picture, and attractive prices.

We aim to identify what aspects of personalization investors value and to what extent they valued different tailored solutions.

The paper contains data and product information about Morningstar Australia Equity Research Methodology

We believe that a company's intrinsic worth results from the future cash flows it can generate. The Morningstar Rating for stocks identifies stocks trading at a discount or premium to their intrinsic worth--or fair value estimate, in Morningstar terminol

Comments on draft ISSB climate and sustainability standards highlight major challenges to achieving a ‘global baseline.’

The Morningstar Risk Model is a holdings-based model that helps identify and assess the risk in one's investments.

The paper contains data and product information about Morningstar Australia Equity Research Coverage

Lockdowns and coronavirus fears have weighed on China's economy in 2022, with second-quarter GDP shrinking by 2.6% on a sequential basis. We now expect China's GDP to grow just 2.7% in 2022, which (aside from 2020) is the slowest growth since the 1970s.

A study of global equities strategies.

As the field of sustainable investing matures, Morningstar continues to evolve its data, research, and analytics to help investors assess the environmental, social, and governance, or ESG, risks and attributes in their portfolios.

Patchy data and a lack of direct comparability between products mean that financial advisers will struggle to fulfil their new obligations.

Assets surpass 50% market share ahead of a challenging MiFID II amendment.

Flows and assets fall further but hold up better than the broader market.

Investors' response to 2022's market volatility has been one global, collective shrug. Most investors say they are in it for the long haul; their actions in 2022, or lack thereof, demonstrate their commitment. Investors don't control interest rates, infl

We present a wide range of analyses of empirical results from the Morningstar Portfolio Risk Scoring system.

The Morningstar Portfolio Risk Score assesses risk and diversification to help assess whether the riskiness of a portfolio matches the risk profile of an investor.

Mapping a client's level of risk comfort to the Morningstar Portfolio Risk Score.

An integrated client risk-profiling and portfolio risk-scoring system.

Factor attribution analysis.

We expect the U.S. Federal Reserve to pivot to easing monetary policy in 2023 as inflation falls back to its 2% target and the need to shore up economic growth becomes paramount. Our 2026 and long-run projection for the federal-funds rate and 10-year Tre

Asset managers' comments on the SEC's proposed rule reveal broad support but also deep concerns.

Plan sponsors may not always consider participants’ behavior or needs when selecting target-date glide paths.

A report on investor returns in the United States.

Evaluating 25 asset managers’ approaches to ESG themes.

As asset managers disclose their targets, commitments vary wildly. What's an investor to do?

In this paper, we focus on understanding the key considerations involved in incorporating global equity thematic funds within portfolios. Our findings will be of interest to advisors and individual investors who wish to connect their portfolios to the ev

The EU taxonomy classification system of environmentally sustainable activities and large EU corporations will disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU goal of bei

The EU taxonomy classification system of environmentally sustainable activities and large EU corporations will disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU goal of bei

As the field of sustainable investing matures, Morningstar continues to evolve its data, research, and analytics to help investors assess the ESG risks and attributes in their portfolios.