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.

Mexico Category Classification System

In March 2004, Morningstar introduced the category classification methodology for Chinese mutual funds. Since that time, there have been significant developments in the Chinese financial market as well as an increase in both the quantity and variety of f

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 betw

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

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

Days before the election, the Democrats stand a solid chance of achieving a clean sweep, with Joe Biden winning the presidency and the Democrats recapturing the Senate. Regardless of the exact probability of this event, we think this is the top election

We take a valuation-focused approach.

Morningstar aims to meet growing regulatory demand by providing a method of ranking the universe of funds available for sale in a target market or regulatory jurisdiction.

Growth in the sustainable fund market continues to be resilient.

Given the general movement toward considering ESG factors among traditional funds, we extended our research to see the availability of funds that consider ESG in DC plan offerings.

Income-based program designs show promise for closing the racial wealth gap.

Defined-contribution plans, especially 401(k) plans, are a central part of how Americans save for retirement.

The COVID-19 pandemic has forced an unprecedented experiment with working from home. We estimate 45% of U.S. workers were working from home at the 2020 pandemic peak. However, we shouldn't assume that working from home will be the new normal, as history

There is considerable debate about the long-term impact of COVID-19 on the economy. Many have argued that the coronavirus will dramatically accelerate ongoing shifts in the economy (such as the shift from brick-and-mortar retail to e-commerce), or that i

A report on investor returns in the United States.

After successfully containing its domestic COVID-19 outbreak by the end of February, China was able to jump-start its economy in the second quarter and now leads the global economic recovery. With China's factories fully up and running, the question turn

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.

Morningstar has conducted qualitative, analyst-driven research on 529 plans since 2004. Since July 2012, we have expressed this research through the Morningstar Analyst Rating for 529 College-Savings Plans accompanied by written analysis. An essential co

The second quarter of 2020 saw a rapid recovery in global equity markets and continued depression in oil prices. Through this turmoil, interest in sustainable investments continued to grow steadily. The following report provides updates on sustainable fu

Fixed income investors can find their portfolios exposed to many different types of risk. These risks can affect whether their investment objectives are achieved. Portfolio breakdowns are a traditional means of analyzing risk. They have a critical shortc

After several months of dour data rolling in for the U.S. and global economies, the surprisingly positive U.S. jobs report on June 5 and retail sales report on June 16 have given investors a glimpse of the recovery from the coronavirus. For the United St

Are funds reacting similarly during the coronavirus pandemic?

The purpose of this project is to investigate the financial attitudes and behaviors of generation Z, defined here as persons born between 1995 and 2010.

These securities may look appealing on paper, but investors should be aware of their drawbacks.

The coronavirus pandemic is already delivering eye-popping economic data, with the U.S. unemployment rate reaching 15% in April, the worst number since the Great Depression. Despite the inflow of very bad data, equity markets have rallied over the past s