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.

We agree that there's much to be skeptical of with the original robo-advisor business model. In fact, we wrote in 2015 about the challenging economics, how many stand-alone robo-advisors wouldn't survive, and robo-advisors integrated with established fin

U.S. Equity Inflows Surge, While International-Equity and Taxable-Bond Flows Tail Off

The paper outlines category definitions applicable to the Indian market.

Quality recommendations for current income and income growth from stocks.

Investing in the wide-moat stocks of today and tomorrow

Morningstar's cross-listed ETP performance methodology.

Fiduciary responsibility and increased regulations require investors to analyze and understand their risk exposures in a carbon-constrained future. To help investors address this challenge, Morningstar has introduced portfolio carbon metrics that measure

Here is the methodology for this designation, which is assigned to portfolios that have low carbon-risk scores and low levels of fossil-fuel exposure.

Methodology paper explaining how Morningstar calculates the average bond price for a portfolio.

Quality recommendations for current income and income growth from stocks.

Morningstar ETF Managed Portfolios Landscape Report Q4 2017

China has maintained its economic rebalancing to consumption through the first quarter. But this process remains slow, as the Chinese consumer is becoming challenged with higher levels of household debt, and the picture for consumption growth is looking

Investing in the wide-moat stocks of today and tomorrow

Profit margins have expanded rapidly over the past three decades. That, combined with strong optimism for future growth, has driven market earnings multiples to extreme levels. We view overall stock market valuations as stretched, with close to 60% of ou

Quality recommendations for current income and income growth from stocks.

All-time high flows, paired with positive returns, lifted assets in target-date mutual funds above $1 trillion in 2017. This year's report covers recent developments in the competitive landscape, and then it highlights noteworthy considerations for targe

Investing in the wide-moat stocks of today and tomorrow

U.S. President Donald Trump recently shook up global financial markets by announcing plans to enact import tariffs of 25% on steel and 10% on aluminum. The exact form these tariffs will take remains unclear. We've updated our forecasts and fair value est

The paper outlines category definitions applicable to the New Zealand market.

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.

The paper outlines category definitions applicable to the Mexican market.

The paper outlines category definitions applicable to the Mexican market

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

New Year, Not-So-New Trends in Flows

Quality recommendations for current income and income growth from stocks.

Investing in the wide-moat stocks of today and tomorrow

To receive safe harbor regulatory protections, defined-contribution plan sponsors must, among other things, follow a prudent process for selecting a qualified default investment alternative. This includes considering the specific demographics of the part

This methodology addresses the assumptions and formulas used in calculating the Total Return. This methodology is only applicable to interest rate series that are updated at a daily frequency. It is intended for interest rate indices with one or less yea

Quality recommendations for current income and income growth from stocks.

Investing in the wide-moat stocks of today and tomorrow

Quality recommendations for current income and income growth from stocks.

Taxable bond was once again the Morningstar category group with the largest inflows last month, as investors sought to lock in the gains of an almost-nine-year bull market and continued to rebalance from stocks to bonds.