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.

Using the Sustainalytics ESG Impact Framework, Morningstar introduces new impact metrics to help investors evaluate a company's environmental and social impacts, as well as how these play out within an investor's portfolio.

The actual impact of the methodology enhancement on funds' Morningstar Sustainability Ratings is limited in terms of both the number of funds affected and the magnitude of the change observed.

This new study examines the factors that influence differences in savings rates for American households. Specifically, we focus on how income, education, age, nativity, family structure, financial giving, and living in an urban versus rural location are

This study examines practical ways in which retirees can make their savings last longer without compromising their standard of living and explores the trade-offs some of those techniques entail.

Inflows accelerate for these products.

New Zealand Classification System

In March 2004, Morningstar introduced the category classification methodology for Chinese mutual funds. Since that time, there have been significant developments in the Chinese financial market as well as an increase in both the quantity and variety of f

Australian category classification system

Today, many investors remain hesitant to invest in crypto, citing risks such as legal uncertainty and volatility, as a single social media post can affect the price of a crypto. Still, its growing value demonstrates that a segment of the population is in

New disclosure rule in Europe drives global sustainable fund assets to almost USD 4 trillion.

In this study, I explored why people may buy 12 investable assets (such as stocks, mutual funds, or cryptocurrency). I paid particular attention to not only the predictors of investing behavior overall (like the number of investments one has), but also o

We analyzed Relationship Summaries from 100 firms, spanning broker/dealers, RIAs, and dual registrants, to assess the quality of information provided to investors and found few firms exceeded the minimum requirements to provide investors with all the nec

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

This document explains the methodology behind Morningstar Portfolio Risk Score for evaluating portfolios and determining if they align well with the asset allocations of the Morningstar Target Allocation Indexes.

Morningstar set out to better understand the extent of the U.S. racial wealth gap and its underlying causes. Our goal is to better inform ourselves and others in the field and to help work toward solutions to close the racial wealth gap. In this paper, w

Two recent proposals look to boost retirement savings by expanding the Saver’s Credit, a tax credit that provides a “government match” for lower-income households making contributions to their retirement accounts. Here is our analysis and findings.

Motivating people to prepare for retirement may need a tailored approach.

A report on investor returns in the United States.

The Morningstar Rating for Funds Methodology provides the theoretical basis and calculation logic for the quantitative star rating.

China's GDP growth accelerated in the second quarter, as the ebbing of coronavirus cases allowed the normalization of consumer behavior. The coronavirus Delta variant poses a threat to China's recovery in the near term, but the bigger issue over the next

How information about funds and fund asset managers’ diversity, equity, and inclusion affects retirement plan fund allocations.

A guide to the Morningstar classification system for Fixed Income, cash and cash equivalents. This methodology document addresses the Morningstar global fixed income classification.

Until now, we have been refreshing our flows models on an ad-hoc basis. Now we have implemented the fund flows model into Morningstar products so these insights can be gleaned in a live setting.

Examining Morningstar's equity index range highlights unexpected pockets of ESG risk and carbon intensity.

Methdology explaining the Morningstar portfolio level calculations for EU taxonomy

Using corporate legal filings in the United States, United Kingdom, and Canada, Morningstar introduces new gender diversity metrics to help investors evaluate the gender diversity breakdown of officers and boards of directors for public companies as well

In this research, I explore people's perceptions of the behavioral interventions designed to help them save for retirement. This allows us to assess public sentiment of these interventions and gain insight into the trade-offs people face when addressing