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

Augmenting investment research with natural language processing for thematic funds.

Detecting factor crowding in Morningstar Risk Factors.

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

Methodology Definitions for U.S. Institutional Categories

In our research, we focus on what behaviors and actions influence people’s willingness to trust/delegate/recommend a financial advisor.

Europe and Hong Kong lead the way in terms of ESG practices. The U.S. scores well despite some big companies' involvement in controversies; China plummets.

In this third edition, we provide an updated view of the rapidly evolving global landscape of climate funds.

This is the second of two papers in which we analyze investors’ use of digital trading platforms and their appreciation of their features. Here, we examine which digital trading platform features resonated with investors and which they would rather do wi

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

Our take on the digital advice industry and the best options for individual investors.

The methodology 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'

As sustainable investing becomes more common, it is important that industry professionals are able to effectively introduce and talk about the subject with clients. This is no easy task, as sustainable investing is multidimensional, with novel nomenclatu

This study seeks to understand Americans’ perceptions of this strategy and consider who may benefit from this approach. We do this through analyzing responses to a survey about their experiences and opinions of group savings, the kinds of personal relati

Morningstar Fee Level for Canada methodology paper.

Morningstar Fee Level for Canada methodology FAQs

A look at how key asset classes performed in 2021, how correlations have changed, and the implications for portfolio building.

As part of our research to examine the causes and potential solutions to the U.S. racial wealth gap, we took a deep dive into the finances of Black households.

Morningstar leverages its vast database of mutual fund holdings to map the company-level data to portfolio holdings and calculate impact metrics at the portfolio level.

This notebook provides users with standardized measures of tracking performance and facilitates peer group comparisons.

A rapidly evolving landscape as assets hit EUR 4 trillion.

China posted 4% year-over-year GDP growth in the fourth quarter of 2021, far slower than its prepandemic growth rate. While much attention continues to focus on the effects of the pandemic, we believe slower growth reflects the manifestation of secular t

The EU's sustainability finance disclosure regulation, or SFDR, mandates that certain financial market participants have to disclose the principal adverse impacts, or PAIs, of their holdings.

The EU's sustainability finance disclosure regulation, or SFDR, mandates that certain financial market participants have to disclose the principal adverse impacts, or PAIs, of their holdings.

With the growing popularity and accessibility of factor investments, it is important to analyze fund managers’ performance through the lens of factors. Do fund managers profitably time their exposures to risk factors? How much return comes from long-term

Flows and assets continue to grow at the end of a landmark year.

Morningstar has created a new volatility factor which exploits the low-risk anomaly. This new volatility factor is now in the Morningstar Risk Model, and we can see that it performs better than our old one.

ETFs' flows are poised to overtake mutual funds' in 2022.

The updated style box provides an intuitive visual representation of style that helps investors build better portfolios and monitor them more accurately.

In this research, we explore two areas in which we may find new sustainable investors: people who believe that sustainable investing is important but do not invest in that way themselves and people who engage in sustainable behavior when buying consumer

It is clear that new online tools and advice outlets may change investing and investors for years to come. Here, we aim to better understand this new investing environment and how it impacts the behaviors of individuals.

EU-domiciled funds (or funds sold into the EU) must calculate and disclose their portfolio's alignment with the EU taxonomy by providing an aggregation of the alignment of the underlying holdings. This methodology paper describes the calculation of those

The EU taxonomy is a classification system of environmentally sustainable activities.