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.

In November 2021, Morningstar will enhance the Sustainability Rating to cover not just corporate investments held by funds but also investments in countries, such as Sovereign Debt. This FAQ document aims to answer common questions about this most recent

A breakdown of Morningstar Analyst Ratings methodology changes.

We share details about this feature.

A growing array of options.

An improving picture, but regulation would induce a more-complete and comparable baseline of material information for investors.

We look at the pros and cons and successes and failures of taxing financial transactions.

This report reviews the risk-tolerance scale and the scoring algorithm of the Morningstar Risk Profiler, which uses the FinaMetrica psychometrics risk-tolerance assessment.

Understanding the extent and importance of behavioral biases.

Our second assessment of 140 strategies and 31 asset managers.

President Joe Biden has unveiled a $2 trillion infrastructure plan that he plans to pay for largely with increases in corporate taxes. We believe the Democrats are highly committed to passing the plan, and both procedural and political reasons dictate th

China led the global economic recovery in the second half of 2020 (with GDP catching up to its prepandemic trend), growth decelerated in the first quarter of 2021, based on official GDP figures. Real GDP growth posted at just 2.4% (annualized) quarter ov

Methodology paper for Malaysia market

The paper outlines category definitions applicable to the Indian OE fund.

This methodology is applied to HK MPF Funds.

Australian category 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

In this paper, we build on our previous research to examine the range of possible outcomes if the contributions are invested in riskier assets during those 18 years in which money contributed to the account cannot be withdrawn.

The Morningstar Globe Rating for companies is a visual representation of the Sustainalytics ESG Risk Classification that will allow investors to easily identify securities with low ESG risk.

The Globe Rating for companies is a visual representation of the Sustainalytics ESG Risk Classification that will allow investors to easily identify securities with low ESG risk.

For funds available for sale in the United States.

Europe leads the world in ESG practices, along with Hong Kong and Taiwan. The United States scores well on Carbon Metrics.

Morningstar Risk Decomposition Methodology

Applying Sustainalytics-driven carbon metrics to Morningstar’s suite of equity indexes can guide investors seeking to reduce carbon exposure.