Methodology Documents

Introduction to EMT.

A risk model forecasts the distribution of future asset returns. Several features make the Morningstar Risk Models unique.

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

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

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

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

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.

The EU taxonomy classification system of environmentally sustainable activities and large EU corporations will disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU goal of being net zero by 2050.

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.

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.

We present a wide range of analyses of empirical results from the Morningstar Portfolio Risk Scoring system.

An integrated client risk-profiling and portfolio risk-scoring system.

The EU taxonomy classification system of environmentally sustainable activities and large EU corporations will disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU goal of being net zero by 2050. The EU taxonomy will eventually cover six environmental green "objectives" and will be extended to social objectives and to identify "brown" activities.

The EU taxonomy classification system of environmentally sustainable activities and large EU corporations will disclose information that indicates how aligned the company's revenue, operating expenditure, and capital expenditure are to the EU goal of being net zero by 2050. The EU taxonomy will eventually cover six environmental green "objectives" and will be extended to social objectives and to identify "brown" activities.

As the field of sustainable investing matures, Morningstar continues to evolve its data, research, and analytics to help investors assess the ESG risks and attributes in their portfolios.

Managed accounts (also known as managed portfolios in markets including the United Kingdom) are investment portfolios that are managed by a portfolio manager with discretion over assets at an asset-management firm.

A structured product (also called a structured note) is an investment product that combines a debt issuance with embedded derivatives to create customized payoff profiles. Structured products may have coupon interest and/or principal repayment dependent on the value or return of one or more assets.

The Morningstar Category™ classifications for 529 investment options were introduced in 2010 to help investors make meaningful comparisons between 529 options.

This paper outlines category classifications for portfolios available for sale in the United States.

Methodology Definitions for U.S. Institutional Categories

Here we explore our quantitative equity ratings, which are empirically driven and based on the proprietary ratings our analysts are already assigning to stocks.

The methodology provides information about the currency exposure of the assets and liabilities in which a portfolio is invested.

Questions and answers for this methodology, which provides information about the currency exposure of the assets and liabilities in which a portfolio is invested.

The grades in the Global Investor Experience Fees and Expenses study were based on responses to six questions in a fixed-response survey completed by in-house, market-expert analysts, plus other inputs determined quantitatively by leveraging Morningstar's comprehensive and extensive global database of managed products.