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.

The paper contains information about Morningstar Manager Research Coverage in Australia & New Zealand

Negative sentiment and attractive valuations provide opportunity in parts of the emerging-markets equity complex.

Sector and industry dynamics offer insight into European equity performance trends and future opportunity.

Australian category classification system

This report provides an update on the landscape of Article 8 and Article 9 funds at the end of March 2024, examining aspects such as flows, assets, launches, and reclassifications.

Flows improve in Europe but worsen in the United States.

We conducted a social-media analysis about ESG investing to understand better how investors talk about ESG and the range of sentiments they express in doing so.

Managers demand accountability from companies on their climate plans, but not all in the same way.

The paper contains data and product information about Morningstar Australia Equity Research Methodology

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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.

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.

Voting records indicate that concerns over potential collusion by signatories are overstated.

Morningstar index behavior in 2016 and 2020 is interesting to examine, but the honest answer is: who knows?

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.

The Morningstar Low Carbon Transition Leaders Indexes offer investors a means of aligning portfolios with companies whose managements are demonstrating progress toward net zero. Through a simple, objective methodology, the indexes represent a practical a

A look at how key asset classes performed in 2023, how correlations have changed, and the implications for portfolio building.

Navigating momentum crashes using the first- and second-order derivatives of the momentum factor.

Disagreement among managers on disclosures about Scope 3, and on political and societal issues.

How are individual investors thinking about trendy asset classes?

The EU taxonomy is a classification system of environmentally sustainable activities that require large EU corporations to disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU

The paper contains data and product information about Morningstar Australia Equity Research Coverage

Analysis of the Morningstar Emerging Markets Index reveals compelling valuations, potential catalysts, and some diversification benefits.

Global open-end and exchange-traded funds had USD 66 billion of estimated net flows in 2023, a weak recovery following outflows in 2022.

First quarterly outflows on record, while passive funds continue to attract new money.

Investors pull record money from Article 8 funds, while Article 9 funds suffer first-ever quarterly outflows.

Why investors continue to work with their financial advisors.

Morningstar sustainability indexes' mixed performance can be blamed on ESG risk within the 'Magnificent Seven.'

Simulating fund performance during market turbulence.

Persisting beyond alpha-decay and the efficient-market hypothesis: Momentum remains pervasive and relevant.

Voting records for the largest U.S. and European managers reveal greater divergence in 2023.