Signature Research & Methodology

The rationale that underpins our calculations and capabilities

Morningstar Risk Model

Risk is inherent to investing. Developing a prospective view of risk allows investors to make investment decisions tailored to their individual risk preferences and ultimately increase the utility derived from their investment portfolios. A risk model forecasts the distribution of future asset returns. This distribution contains all the information needed to assess the riskiness of a portfolio.

Morningstar Research | Oct 1, 2019

Global Investor Experience 2019

The Global Investor Experience Fees and Expenses study grades are based on responses to six questions in a fixed-response survey completed by in-house, country-expert analysts, plus other inputs determined quantitatively by leveraging Morningstar’s comprehensive and extensive global database of managed products.

Grant Kennaway | Sep 16, 2019

A Framework for Evaluating Model Portfolios

This research paper provides a high-level overview of the model portfolio landscape and outlines our framework for assigning the forward-looking Morningstar Analyst Ratings to target-risk series of separate accounts that are representative of model portfolios.

Jason Kephart | May 06, 2019

Fixed-Income Style Box Methodology

The Morningstar Fixed-Income Style Box helps investors and financial professionals better understand the risks associated with a fund. It combines interest rate and credit risk in an intuitive visual to assist in portfolio construction and monitoring, leading to better investing outcomes.

Morningstar Analysts | Oct. 31, 2016

Morningstar Analyst Ratings for Funds Methodology

The Analyst Rating reflects Morningstar analysts' forward-looking analysis of a fund, expressed on a five-tier scale with three positive ratings of Gold, Silver, and Bronze, a Neutral rating, and a Negative rating.

Morningstar Fund Analysts | Nov 15, 2011

The Morningstar Analyst Rating for Funds: Analyzing the Performance of the Analyst Rating Globally

We analyzed the global performance of the Morningstar Analyst Rating for funds based on its ability to predict funds' future risk-adjusted returns. Taken as a whole, we find that Analyst Ratings effectively sorted funds based on their average future risk-adjusted returns.

Jeffrey Ptak, James Li | Dec 11, 2017

Morningstar Equity Research Methodology

This document details the methodology behind the Morningstar Rating for stocks, which offers investors and advisors a tool to assess an equity's intrinsic value against its current market price.

Morningstar | Mar 15, 2017

Estimated Net Cash Flow Methodology

Morningstar calculates estimated net cash flow for global open-end funds and ETFs, an estimate of the money put in or withdrawn by fund investors, accounting for reinvestment of distributions.

Morningstar Analysts | Aug. 31, 2018

Morningstar Quantitative Rating for Funds Methodology

To expand the number of funds we cover, the Morningstar Quantitative Rating™ for funds is created with a machine learning model that uses the decision-making processes of our analysts, their past ratings decisions, and the data used to support those decisions.

Lee Davidson | Jul 12, 2018

Examining the Morningstar Quantitative Rating for Funds

Read five event studies on the Morningstar Quantitative Rating in its first year of existence. By analyzing the ratings for all funds, we find insights into the Morningstar Category system, fund companies, and fund performance.

Madison Sargis, Timothy Strauts | Aug 27, 2018

Morningstar Style Box Methodology

The Morningstar Style Box™ was introduced in 1992 to help investors and advisors determine the investment style of a fund. It provides an intuitive visual representation of style that helps investors build better portfolios and monitor them more precisely.

Morningstar | Feb 28, 2018

Morningstar Rating for Funds Methodology

This methodology describes the rationale for, and the formulas and procedures used in, calculating the Morningstar Rating™ for funds (commonly called the “star rating”).

Morningstar Analysts | Nov 01, 2016

The Morningstar Rating for Funds: Analyzing the Performance of the Star Rating Globally

Morningstar examines the efficacy of the Morningstar Rating for funds, popularly known as the star rating, on its ability to predict risk-adjusted fund returns. We found that the star rating had some moderate predictive power during our sample period.

Jeffrey Ptak | Nov 10, 2016

Morningstar U.S. CMBS General Ratings Methodology

This methodology describes Morningstar’s approach to issuing letter-grade ratings for commercial mortgage-backed securities at issuance and during surveillance.

Morningstar | Feb 01, 2017

A Framework for Analyzing Multifactor Funds

We present a framework to help investors better understand equity multifactor funds approaches to portfolio construction and bring it to life by applying the framework to some multifactor funds in a series of fund profiles.

Alex Bryan, Ben Johnson | Jun 11, 2018

Morningstar Low Carbon Designation

This is the methodology for Morningstar® Low Carbon Designation™, which is assigned to portfolios that have low carbon-risk scores and low levels of fossil-fuel exposure.

Jon Hale | Apr 30, 2018

Morningstar Global Category Classifications

This document specifies the category classifications Morningstar maps to managed investment vehicles globally. The classifications are mappings from local and regional Morningstar Category for Funds classifications. The mapping enables users to associate similar vehicles from multiple geographies.

Morningstar | Oct 01, 2018

Morningstar Category for Funds Definitions

Morningstar assigns categories to multiple types of vehicles, including mutual funds, ETFs, variable annuities, and separate accounts. A vehicle is placed in a given category based on their average holdings statistics over the past three years. Morningstar’s manager research team reviews and approves of all category assignments.

Morningstar | Apr 01, 2018

Active Share in European Equity Funds

We study a subset of European funds investing in European equities to see how their active share has developed over time, and evaluate how the active share measure might be used as a tool to aid fund selection.

By Mathieu Caquineau, Mattias Mottola | Mar 01, 2016

More Moats, More Profits

We find evidence that the presence of economic moats is increasing among the world’s largest firms, suggesting that elevated profit margins relative to historical levels may not completely disappear when the business cycle turns.

Damien Conover | Apr 09, 2018

Morningstar Analyst Rating for ETFs and Index Funds Methodology

This document describes the methodology behind the Morningstar Analyst Rating™ for funds, the summary expression of our forward-looking analysis of a fund. Ratings are assigned globally on a five-tier scale. Our global analyst team has identified five key areas that we believe are crucial to predicting the future success of funds People, Parent, Process, Performance, and Price.

Morningstar | Sep 01, 2016

Morningstar® Analyst Rating™ for Separately Managed Accounts and Collective Investment Trusts

Morningstar's approach to rating SMAs and CITs is consistent with its global research philosophy for mutual funds and other managed investments.

Morningstar | Nov. 19, 2018

Morningstar Extended Performance Methodology

Morningstar created extended performance statistics to connect the inception date of a new share class or distribution channel and the inception date of the original portfolio. This helps investors see how the portfolio as a whole has performed over time.

Morningstar | Sep 05, 2018

A Global Guide To Strategic-Beta Exchange-Traded Products

Learn about the state of the global strategic-beta exchange-traded products landscape. As of June 30, 2017, there were 1,320 strategic-beta ETPs, with collective assets under management of approximately $707 billion worldwide.

Ben Johnson | Sep 07, 2017

Morningstar Sustainability Rating for Funds Methodology

The Morningstar Sustainability Rating helps investors use environmental, social, and governance, or ESG, information to evaluate portfolios. The rating provides a reliable, objective way to evaluate how their portfolios are meeting ESG challenges.

Madison Sargis | Oct 31, 2018

Morningstar Portfolio Product Involvement Methodology

The Morningstar Portfolio Product Involvement metrics are holdings-based calculations that use company-level analytics from Sustainalytics, a leading ESG research provider. They reflect the portfolio’s exposure to involvement in a range of products, services, and business activities.

Morningstar | Sep 28, 2017

Morningstar Quantitative Rating for Funds Input Data Methodology

The Morningstar Quantitative Rating™ for funds generates analyst-driven insights for all open-end funds. By ranking funds on a comparable scale, our system lets you quickly see Morningstar's relative opinion for each fund's pillars.

Lee Davidson | Jun 26, 2017

Morningstar Fee Level for Funds Methodology - U.S.

The Morningstar Fee Level for funds was developed to help investors compare an investment vehicle’s relative level of fees with those of similar investment vehicles. The methodology applies to all U.S.–based funds and subaccounts in our database.

Morningstar | Aug 31, 2017

Morningstar Total Return Index Methodology

This document details the methodology for the Morningstar Total Return Index, calculated at the fund level and representing the value over time of one share purchased and owned since inception, assuming all dividends and distributions are reinvested.

Morningstar | Aug 31, 2017

Morningstar Category Average Methodology

Morningstar category averages represent the average return of funds within their category over time. Morningstar creates a daily total return index series, or TRI, as well as monthly, quarterly, and annual averages of return and non-return data for each category.

Morningstar | Aug 31, 2017

Morningstar Global Fixed Income Classification Methodology

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

Morningstar | Oct 13, 2017

Performance Persistence Among U.S. Mutual Funds

It's no secret that investors often interpret past performance as evidence of manager skill and put their money to work accordingly. Because performance-chasing is so prevalent, Morningstar conducted this study to assess whether there is any merit to selecting actively managed mutual funds based on past performance.

Alex Bryan | Jan 01, 2016

The Impact of the Default Investment Decision on Participant Deferral Rates: Managed Accounts vs. Target-Date Funds

Using a dataset of 66,297 participants from 195 defined contribution retirement plans that offer either a target-date fund or managed accounts as the plan default investment, we analyze the effect this decision may have on participant deferral rates.

David Blanchett, Daniel Bruns | Oct 17, 2016

The Impact of Expert Guidance on Participant Savings and Investment Behaviors

This paper discusses the potential benefits of Expert Guidance, or professional online retirement advice, on the savings and investing decisions of individual participants of defined contribution plans, such as 401(k) plans.

David Blanchett | Aug 20, 2014

Alpha, Beta, and Now... Gamma

Here, we present a concept that we call “Gamma,” designed to quantify the additional value that can be achieved by an individual investor from making more intelligent financial planning decisions.

David Blanchett, Paul Kaplan | Aug 28, 2013

Estimating the True Cost of Retirement

When consumption and funding levels are combined and correctly modeled, the true cost of retirement is highly personalized based on each household's unique facts and circumstances, and is likely to be lower than amounts determined using traditional models.

David Blanchett | Nov 05, 2013

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