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Methodology Documents

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Methodology Documents

Morningstar's second annual stewardship survey of the U.S. mutual fund industry examines the relationship between asset managers' stewardship attributes and investor outcomes and continues to find that better stewards of capital generally deliver better overall fund performance.
Methodology Documents

The recent strength of the U.S. dollar has negatively impacted the performance of international-equity funds that do not hedge their foreign-currency exposure. This paper discusses the impact of foreign-currency movements on these types of portfolios and compares the performances of currency-hedged and unhedged international-equity strategies against the history of the U.S. dollar over the past 40 years.
Methodology Documents

Eight months after Bill Gross's abrupt departure from PIMCO, Morningstar explores changes to the firm and the recent evolution of its investment team. We further address recent outflows and assess their impact on PIMCO's business model and ability to attract and retain talent.
Methodology Documents

Women are scarce among U.S. fund managers and underrepresented compared to other professions. This paper finds that, though the sample is relatively small, funds managed by women perform comparably to those managed by men.
Methodology Documents

Here we offer a framework for building an asset allocation focused on income. These portfolios may appeal to investors who are in draw down mode with their savings.
Methodology Documents

Morningstar has conducted qualitative research on 529 college-savings plans since 2004. We found that in 2014, the majority of 529 plans continued to use fixed glide paths in their widely used aged-based portfolios despite market-timing risk.
Methodology Documents

This paper discusses Morningstar's view of the 699 managed strategies investing in exchange-traded funds it tracks, giving investors and advisors insight into first-quarter industry performance in 2015.
Methodology Documents

This paper shows it's possible to reduce the risk of severe downside events without sacrificing returns. This could improve on traditional diversification.
Methodology Documents

This document presents the methodology for the Morningstar Calculated Fixed-Income Style Box, which offers investors and advisors a tool to assess credit risk and interest rate risk for fixed-income investments.
Methodology Documents

Target-date fund investors have benefitted from higher average returns and lower average fees in 2014, indicating that investors have used funds well in preparing for retirement.
Methodology Documents

Downside capture ratios can reveal how your mutual funds will perform when the stock market swoons.
Methodology Documents

Disciplined Growth Investors’ managers have built a moderate allocation strategy unlike most others.
Methodology Documents

This paper discusses Morningstar's view of the 699 ETF managed strategies it tracks, giving investors and advisors insight into industry performance at the end of 2014.
Methodology Documents

This paper examines the remarkable success of regional malls in the Washington, D.C. area. We consider performance barometers such as sales per square foot and tenant selection to assess their market position and outlook.
Methodology Documents

This paper studies the impact of accelerated stock price increases on future performance. Accelerated stock price increases are a strong contributor to both poor future performance and a higher probability of reversals. It implies that accelerated growth is not sustainable and can lead to drops.
Methodology Documents

Frontier-markets economies represent an earlier stage of development relative to emerging-markets economies and provide a faster-growing, better-diversified investment alternative. This paper provides an overview of the opportunities and risks involved in the mutual fund and exchange-traded fund options.
Methodology Documents

In this paper, we compare the costs of ETFs and index funds, looking at expense ratios, tracking performance, tax efficiency, and trading costs.
Methodology Documents

This paper discusses Morningstar's view of the 699 ETF managed strategies it tracks, giving investors and advisors insight into industry performance during Q3 2014.
Methodology Documents

Rating shopping is the practice of arrangers and issuers of structured debt products hiring credit rating agencies with the highest ratings or the least stringent rating level requirements. This paper examines the problem and argues that "race to the bottom" scenario has not occurred due to the strong regulatory oversight established after the financial crisis.
Methodology Documents

Deferred income annuities are designed to provide guaranteed income for life, with benefit payments beginning at a later date rather than immediately. This paper discusses the potential benefits and challenges plan sponsors, providers, and participants of defined-contribution plans face in incorporating DIAs.
Methodology Documents

The Morningstar® Stewardship GradeSM measures the extent that fund companies align their interests with fundholders, offering investors and fund a tool to assess client experience against firm practices. This paper examines the relationship between the Stewardship Grade and returns in Canadian mutual funds.
Methodology Documents

This paper discusses Morningstar's view of the 699 ETF managed strategies it tracks, giving investors and advisors insight into industry performance during Q22014.
Methodology Documents

Issuance activity in U.S. private-label residential mortgage-backed securities (RMBS) continues to stagnate, reflecting structural challenges including regulatory uncertanty and macroeconomic factors. This paper categorizes the hurdles facing the nonagency RMBS market according to their estimated impact and likely resolution timeline.
Methodology Documents

This paper offers evidence that investor risk aversion is time-varying and that changes in risk aversion are primarily related to changes in investor expectations instead of historical market returns.
Methodology Documents

The target-date industry has shown many signs of a maturing, stabilizing market, though there's still plenty of dynamism to be found. Target date funds continue to upend expectations, but other less-favorable trends also continue.
Methodology Documents

This paper analyzes the trend of decreasing mutual fund fees against the recent history of growing total industry assets under management.
Methodology Documents

This study focuses on measuring Tracking Efficiency in Chinese equity ETFs. In order to better evaluate Chinese ETFs, this study focuses on more than tracking methods, as it also touches upon the following factors: trading costs, product and index construction, counterparty risk, and task considerations.
Methodology Documents

Morningstar has conducted qualitative, analyst-driven research on 529 college-savings plans since 2004, providing data on 84 traditional 529 plans, which are included in this study. Assets in 529 plans continue to climb, and plan sponsors have generally hired capable asset managers to run their plans’ assets, but continues to lag that of traditional open-end mutual funds.
Methodology Documents

This paper examines the relationship between asset managers' stewardship attributes and investor outcomes, and finds that better stewards of capital generally deliver better overall fund performance.
Methodology Documents

This paper discusses Morningstar's view of the 699 ETF managed strategies it tracks, giving investors and advisors insight into industry performance at Q42013.
Methodology Documents

Financial assets such as stocks and bonds ar only one component of an investor's total economic worth. Other assets, such as human capital, real estate, and pensions often represent a significant portion of an investor's total wealth. These assets, however, are frequently ignored by practitioners when building portfolios, despite the fact that they share common risks with financial assets. This paper provides evidence that industry-specific human capital, region-specific housing wealth, and pensions have statistically significant exposures to different asset classes and risk factors.
Methodology Documents

The net gearing ratio measures the volatility of a portfolio and the derivatives within it, based on the amount of borrowing the fund does. Here we examine how this ratio is calculated.
Methodology Documents

ETF managed portfolios are investment strategies that typically have more than 50% of portfolio assets invested in ETFs. Primarily available as separate accounts, they represent one of the fastest-growing segments of the managed account universe.
Methodology Documents

When consumption and funding levels are combined and correct 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.
Methodology Documents

This paper offers historical evidence to support the notion that a higher allocation to equities is optimal for investors with longer time horizons and that the time diversification effect is relatively consistent across countries, persisting for different levels of risk aversion.