Understanding Morningstar Medalist Ratings

Morningstar Medalist Ratings are forward-looking assessments that evaluate a fund's likelihood of outperforming its benchmark and peers over the long term. Morningstar analysts assign one of five ratings—Gold, Silver, Bronze, Neutral, or Negative—based on the strength of a fund's people, process, and parent organization. Fee analysis is also factored into every rating, ensuring the assessment reflects net-of-cost outcomes for investors. 

Morningstar data shows a consistent pattern: funds that receive rating upgrades tend to attract investor inflows over the following months and years, while funds facing downgrades tend to experience outflows. This relationship reflects the value many investors and advisors place on the Medalist Rating framework. 

This video discusses findings from Morningstar's The Link Between Morningstar Ratings and Fund Flows Report. You can read the full report for free.

Stephen Margaria: 

Hi, I’m Stephen Margaria, a Manager Research Analyst covering multi-asset and alternative strategies for Morningstar Research Services.

Navigating today's investment choices requires a clear understanding of how to spot potential success and what to look out for when it comes to risk. At Morningstar, our analysts assess a fund's potential to outperform its relevant benchmarks and peers over the long term through our forward-looking medalist ratings.

These ratings provide a powerful framework for gauging the likelihood of a fund’s future outcomes, represented by our Gold, Silver, Bronze, Neutral, and Negative ratings. These ratings represent our analysts’ conviction in the key pillars of a fund: its investment process, the individuals managing it, and the strength of its parent organization. We analyze the people, process, and parent of each fund, combined with rigorous fee analysis to deliver a clear, data-driven perspective. 

When a fund’s Medalist Rating is upgraded, it signals increased analyst confidence. Many investors and investment professionals value the Morningstar Medalist Rating, and our data shows that funds receiving improved ratings tend to see steady inflows of investor money over the following months and even years. 

Conversely, funds that have experienced the worsening of their Medalist rating have, according to our data, tended to experience outflows across those same time frames. For investors, these forward-looking Medalist ratings can be a helpful tool to potentially aid in their investment selection and ongoing monitoring. 

However, it's important to keep in mind that just because we see a connection, it doesn't mean our rating is driving those flows. Many factors influence where money goes, like how a fund has performed recently and what's happening in the broader market. Ultimately, Medalist Ratings offer valuable qualitative insights that can help investors in their research process. 

Asset managers can learn more about using Medalist Ratings by following the Morningstar Essentials link in the description. Thanks for joining me today and I look forward to sharing more research insights soon.