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.

After another market crash, advisors question whether Modern Portfolio Theory is the best way to tackle asset allocation. We asked two experts to debate its merits.

This document describes the rationale for, and the formulas and procedures used in, calculating the Morningstar Rating™ (star rating) for funds domiciled or available for sale in Europe, Hong Kong, Singapore, Taiwan, and the United States.The Morningstar

Morningstar divides countries of the world into 13 different geographic regions, based on equity assets only. The 13 regions can also be folded into three super geographic regions: the Americas, Greater Europe and Greater Asia.

Modern Portfolio Theory Statistics (MPT statistics) are based on the Capital Asset Pricing Model (CAPM) of expected returns developed by Nobel laureate William Sharpe and others in the early 1960s. The CAPM is based on Modern Portfolio Theory (MPT) devel

This survey measures the experiences of mutual fund investors in 16 countries in North America, Europe, and Asia. Aiming to promote best practices for investors, we rated companies across six categories—Investor Protection, Transparency in Prospectus and

This document addresses performance attribution for equity funds and categories methodology, focusing on Morningstar's standard equity-attribution methodology.

As investors awaken to the risks of investing, our distinguished economics panel debates the value of current risk models.

When risk models fall short, advisors need to look no further than the historical record to plan for the next 100-year flood.

This paper studies the role of infrastructure in a strategic asset allocation. It addresses two critical questions: is infrastructure an asset class; and if so, what might be an appropriate asset allocation range. Though adding infrastructure to a divers

This document covers the Morningstar Rating methodology for for three variable products: variable annuity, variable life, and variable universal life.

This document is a supplement to the main methodology, presenting how the holdings weights of the portfolio and the benchmark are calculated under various exception cases. This paper expands on the single period definition described in the Morningstar® E