Morningstar Awards for Investing Excellence: Exemplary Stewardship Nominees

Today we’re sharing the nominees for the 2025 Morningstar Awards for Investing Excellence: Exemplary Stewardship for the US. They are:

• Dimensional
• Fidelity
• MFS

The Exemplary Stewardship Award is back after a one-year hiatus. As in years past, previous winners were not considered, given that the award recognizes both short- and long-term behavior. Firms eligible for nomination boast an Above Average or High Parent Pillar rating—a difference from a stricter rule that previously limited the nominees to High-rated Parents, but a change that greatly expands the field and, this year, captures Fidelity as a nominee. Just 12 US-based firms currently earn a High Parent Pillar rating. Morningstar will announce this year’s winner in early July.

The Exemplary Stewardship nominees for 2025 couldn’t be more different from each other. But they are all standouts in a competitive industry that is constantly shifting.

Dimensional

Founded in 1981 by finance scholars David Booth and Rex Sinquefield, Dimensional has stayed true to its academic roots for more than 40 years. Arguably the original “smart-beta” purveyor, Dimensional systematically builds portfolios that emphasize factors its research deems are most important, which has generally meant investors can count on portfolios that are smaller-cap and value-oriented compared with the competition. Of particular note are Dimensional’s long-running efforts to educate the financial advisors and investors who buy its funds so they maintain a long-term investment horizon; the firm has long beat the dollar-cost-averaging drum, for example. Trading and execution are considered in the firm’s research and portfolio management processes, as reducing transaction costs is a high priority.

Compared with other actively managed portfolios, the firm’s systematic approach and attention to trading costs mean its funds are low-cost, but the proliferation of other factor-based exchange-traded funds has given Dimensional a run for its money over the past decade on the fee front. The firm responded with substantial fee reductions in the early 2020s and recently announced further management-fee cuts on five ETFs. The firm has more generally and appropriately embraced the ETF structure, converting seven tax-managed mutual funds to ETFs. It has filed for the ETF-as-share-class exemption; as of this writing, Dimensional has refiled another two times, responding to Securities and Exchange Commission comments with each submission. (The SEC has not yet granted relief to any firm, but other firms have also filed or refiled, following Dimensional’s lead on application specifics.)

Dimensional: Fund Offerings

As might be expected, Dimensional tends to attract academically minded portfolio managers, and its manager retention is comparatively high, at 84% through May 2025. Steadfast in its research-driven investment philosophy, product development and management are disciplined; the firm launches funds within its competencies and rarely merges or liquidates them. Morningstar Medalists of Gold, Silver, and Bronze comprise 72% of its share classes, and 97% of its assets under management are in Gold-, Silver-, or Bronze-rated funds. Its five-year success ratio, which counts the number of funds that have both survived and outperformed their respective category medians, is 64% through May 2025. Dimensional boasts a High Parent Pillar rating.

Fidelity

Once primarily renowned as a fundamental-research powerhouse for equity investing, Fidelity has evolved quite a bit in its nearly 80-year history. Today, the family-held brokerage and asset manager houses one of the country’s largest 401(k) recordkeepers, a major health-savings-account business, and a solid robo-advisor. It serves a broad range of clients, from the most-sophisticated institutional investors to the do-it-yourselfers it grew up with. In the asset management department, Fidelity features an industry-leading bond shop, as well as two strong target-date series—and it’s still a fundamental-research powerhouse for equity investing. One of its most-accomplished equity portfolio managers, Will Danoff, and one of its most-distinguished core-bond portfolio managers, Ford O’Neil, are both nominated for Morningstar’s Outstanding Portfolio Manager Award in their asset classes this year.

Fidelity’s ability to adapt while protecting its brand is admirable. Changing investor preferences have been at the center of its evolution. While Fidelity has launched some niche offerings, it has also been a force for good. Although the firm has some compelling active management capabilities, for example, it also offers index funds, which have grown tremendously thanks to undercutting most rivals on price. In fact, today, Fidelity ranks third among the biggest four passive shops in the United States, and its assets under management are now split almost evenly between active and passive funds. It has converted several mutual funds to ETFs, responding to growing investor interest, though ETF AUM is only 3%. Getting in on the private markets action, the firm is expanding into private credit, building its capability organically. Fidelity has never been one for growth by acquisition.

Fidelity: Fund Offerings

Other parts of Fidelity’s evolution improve its culture. Its research intensity and competitive nature have attracted star managers, but it has moved to address key-person risk by adding comanagers and giving people opportunities to run money. So, while an eventual Danoff or O’Neil departure will be felt at the firm, succession planning and manager transitions have become smoother recently. Gold, Silver, and Bronze Medalists comprise 54% of Fidelity’s share classes, and 85% of its assets under management are in Gold-, Silver-, or Bronze-rated funds. Its five-year success ratio is 59% through May 2025. Fidelity earns an Above Average Parent Pillar rating.

MFS

MFS is the oldest US asset manager on the nominee slate, having celebrated its 100th birthday as a firm in 2024. (It also runs the country’s oldest mutual fund, MFS Massachusetts Investors Trust MITTX, launched in 1924.) The firm’s extended history may be what gives it such a long-term perspective—something that earned it this award nomination. Indeed, MFS is thoughtful and measured in just about every aspect of its business, from investment time horizons to leadership and portfolio-manager transitions to product development. It is careful about evaluating trends; at worst, MFS is a slow follower of positive developments, and at best, it avoids danger.

A team orientation is prevalent here. Portfolio managers (referred to as generalists at MFS) rely on a centralized group of analysts (specialists) for stock and bond picks. Specialists can build careers in those roles, though they also serve as potential generalists, as MFS prefers homegrown portfolio managers to outsiders. The stability of the investment team has helped the firm set the bar high when it comes to succession planning. MFS funds are team-run, and it announces retirements and successors well ahead of time, which allows the portfolio managers to transition responsibilities and portfolio holdings gradually. For much of the firm’s existence, its equity team has been the heart and soul of the organization, but MFS has spent the better part of the past decade methodically building its fixed-income business. Testing some now-crowded waters, in December 2024, the firm launched three equity and two fixed-income active ETFs, though they are small, comprising just 0.12% of AUM as of May 2025. However, unlike several peers, MFS hasn’t committed to offering funds that invest in private assets, either on its own or with a partner.

MFS: Fund Offerings

MFS is a model of stability, and that’s part of its charm. Among the three nominees, it boasts the longest average manager tenure, at nine years, and the longest average industry manager tenure, at more than 15 years. It is slow to launch funds but also rarely merges or liquidates them: Over the past five years, its obsolete rate is just 4%. A lineup that shares a high-quality bent and has thus been light on the momentum factor that has fueled equity returns over the past five years is reflected in its weaker five-year success ratios. Gold, Silver, and Bronze Medalists comprise 54% of MFS share classes, and 88% of its assets under management are in Gold-, Silver-, or Bronze-rated funds. MFS merits a High Parent Pillar rating.