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.

Although overconfidence bias is a natural tendency, there are ways to combat it. In this piece, we map out six steps you can take to become better calibrated and avoid the pitfalls from behavioral biases.

In each year over the past two decades, more money has been raised in private markets than in public markets. This trend defied even the tumult of 2022 as venture-backed companies raised billions despite economic uncertainty. "Unicorns," or venture capit

The explosive growth of private markets has been one of the most significant developments in capital markets in the last two decades. More money is being raised in private markets than in public markets each year with no sign of a change in the trend. Du

This report focuses on returns (for the quarter to date) to measure factor performance.

Creating the right mindset to understand what motivates people about money.

Morningstar sustainability indexes reflect the diversity of the field.

ESG Resolutions: How Have the Top U.S. Asset Managers Voted?

European investors show continued appetite for ESG products despite headwinds, while U.S. investors retreat.

Article 9 fund assets shrink by EUR 175 billion, or 40%, following a wave of downgrades.

Morningstar created extended performance statistics to “fill in the gap” between the inception date of a new share class or distribution channel and the inception date of the original portfolio. Extended performance lengthens the performance data that is

The advantages and limitations of empirical approaches to long-term wealth forecasting.

ETFs are in the driver's seat in net flows, but the majority of global long-term assets under management remain in open-end funds.

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

In this document we present a wide range of analyses of empirical results from the Morningstar Portfolio Risk Scoring system.

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

Morningstar indexes reveal lessons about the unpredictability of markets amid a painful year for both stocks and bonds.

A look at how higher bond yields, lower equity valuations, and inflation affect starting safe withdrawal rates,

The Detail Type Id structure is reviewed by Morningstar’s methodology and data experts on an annual basis.

Morningstar collects data from the SFDR annexes embedded within the prospectus and annual reports for funds that are identified by the manufacturer as Article 8 or Article 9 products.

The EU's sustainability finance disclosure regulation, or SFDR, mandates that certain financial market participants must disclose the principal adverse impacts, or PAIs, of their holdings.

The number of climate-themed funds reaches new highs as investors seek more options to manage climate risks and leverage opportunities.

Thematic investing is embodiment of secular growth themes focused on capturing transformational macroeconomic, technological, and ecological trends that have tremendous capability to enhance portfolio outcomes.

This document serves to report on the performance of these factors for the third quarter of 2022. It focuses on returns (for the quarter to date) to measure factor performance.

COP27 will clarify the links between water risk and climate change. How are asset managers responding?

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

Morningstar dividend indexes demonstrate that the relationship between equity income and interest rates is dynamic.

Guide to using the Factor Awareness Dashboard.

Flows fell further but held up better than the broader market.

Managers downgrade more Article 9 funds ahead of 2023 enhanced disclosure regime.

With the introduction of the Morningstar Quantitative Rating, we're extending a useful analytic tool to thousands of funds not covered by Morningstar's analyst team.

This paper explains an alternative utility-based dynamic asset allocation algorithm that does not require expected returns.

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

Top pension funds support sustainability more than fund managers.