Methodology Documents

The Morningstar Category™ classification system for funds lets institutions, advisers and investors effectively compare like funds.

This document describes an approach for incorporating structured products, or SPs, into the methodology framework of Morningstar Risk Model, or RM, and Morningstar Portfolio Risk Score, or MPRS.

In 2023, Morningstar combined the Morningstar Analyst Rating and the Morningstar Quantitative Rating into a single, encompassing forward-looking rating, the Morningstar Medalist Rating.

The Morningstar Risk Decomposition tool achieves this by breaking down a portfolio's risk into individual factors and holdings. This capability allows users to analyze the origins of both total and active risk within each portfolio.

Calculation of Tracking Difference and Tracking Error

Data Content Guide

The Morningstar Categories for funds in the Europe/Asia/Africa universe were first established in the early years of the UCITS (Undertaking for Collective Investment in Transferable Securities) Directive to help investors make meaningful comparisons between Investment funds.

The Morningstar Category™ classification system for funds lets institutions, advisers and investors effectively compare like funds.

The paper defines the Morningstar Categories for the Japan-domiciled open-end funds.

Morningstar has conducted qualitative, analyst-driven research on 529 plans since 2004 and rated plans since July 2012. An essential complement to our database of investment information and our suite of quantitative research tools, such as the Morningstar Medalist Rating for 529 investment options, Morningstar's 529 plan analysis has always focused on helping individuals saving for education expenses make better investment decisions.

The Morningstar Risk Models are a suite of multifactor risk models that help investors identify and evaluate the risk of their portfolios using holdings-based analysis.

As awareness around environmental and social issues has grown, more investors than ever have incorporated an environmental, social, and governance focus into their investment processes.

For funds available for sale in the United States.

For portfolios available for sale in the United States.

Morningstar uses a series of six individual models working in unison to algorithmically assess a vehicle and assign the People, Process, and Parent Pillar ratings to it for those assigned Directly, by Algorithm.

The Morningstar Portfolio Risk Score assesses risk and diversification to help investors, financial professionals, and those who oversee large groups of financial professionals to assess whether the riskiness of the portfolio matches the risk profile of an investor.

Data Content Guide

Morningstar Sustainalytics Low Carbon Transition Rating assesses the degree to which a company’s projected Greenhouse Gas Emissions (GHG) differ from its fair-share budget for GHG emissions.

Morningstar Sustainalytics’ Portfolio Low Carbon Transition Metrics enable investors to understand the degree to which the greenhouse gas (GHG) emissions—attributable to a portfolio—differ from its fair-share GHG emissions budget.

Selecting a comparable fund on specified criteria.

This document describes an approach for incorporating structured products, or SPs, into the methodology framework of Morningstar Risk Model, or RM, and Morningstar Portfolio Risk Score, or MPRS. This allows investors to assess the risk, in terms of expected return volatility, of a portfolio that contains structured products and other assets such as stocks and bonds.

This guide explains the Morningstar approach to capturing key governance functions of investment fund management entities for European markets.

Introduction to EMT.

How we score rollover recommendations in terms of investment quality, client fit, and service value.

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.

Morningstar ESG Commitment Level has supplemented our ratings work with a distinct, qualitative, analyst-driven evaluation of asset managers from an environmental, social, and governance perspective.

The Canadian Investment Funds Standards Committee was formed in January 1998 by Canada’s major mutual fund database and research firms to standardize the classifications of Canada-domiciled retail mutual funds. In 2020, CIFSC began work on a framework to identify Canadian investment funds that sufficiently practice responsible investing. The framework was finalized in 2022.

Australian category classification system

The Morningstar Risk Models are a suite of multifactor risk models that help investors identify and evaluate the risk of their portfolios using holdings-based analysis.

The Low Carbon Designation is an indicator that the companies held in a portfolio are in general alignment with the transition to a low-carbon economy.

Version: 1.0

Version 1.0

The portfolio carbon risk metrics aim to help investors identify, quantify, and manage climate-related investment risks, while the percentile and absolute ranks are intended to support informed investment decisions by allowing for comparison of carbon-related risks against peers.

The Morningstar Portfolio Risk Score is designed to help assess whether the riskiness of the portfolio matches the risk profile of an investor.

Morningstar is introducing "representative cost" fields that will contain the best information on the recurring costs that are charged via the fund itself, and so would not include one-off costs or costs charged by third parties such as advisors or platforms, nor one-off costs charged on entry or exit.

Version 1.2

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 available for the younger investment. This helps investors see how the portfolio as a whole has performed over time.

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

Strategy data, coupled with Morningstar's investment-level and rich portfolio holdings data, informs a comprehensive analytical view of where a strategy fits within investor portfolios and the global marketplace.

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

Data Content Guide

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

Data content guide.

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.

This document covers the calculation methodologies under the legislative regime after the changes that are effective from 31 Dec 2022.

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

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.

The tool constructs fund-level portfolios to facilitate the advisor-led models and lineups. A flexible optimization framework is created that allows for a wide variety of optimization problem formulations.

The Morningstar Sustainability Preferences Portfolio Construction Tool creates a portfolio tracking investment policy model while allowing investors to express their unique environmental, social, and governance preferences as defined in terms of product involvement and impact score.