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.

This paper is a roundup of notable meetings that Morningstar manager research analysts have held recently with portfolio managers and other fund company representatives.

We discuss how momentum, popularity, price, and performance interact in the market. Offshoot of an article in the Journal of Portfolio Management.

This paper discusses Morningstar's view of the 699 ETF managed strategies it tracks, giving investors and advisors insight into industry performance during Q12014.

The quarterly review of the market across sectors by the Morningstar Markets Research Team.

In this document, we provide a detailed overview of how the Morningstar Rating for stocks is derived, and also outline the analytical work that feeds into our coverage of stocks.

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.

529 College-Savings Plans Industry Survey

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 att

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

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.

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

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.

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.

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.

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