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.

Morningstar provides data on individual securities registered in dozens of countries, but researchers evaluating those investments often have a need to study groups of investments as they're branded in a local market.

The Financial Conduct Authority, or FCA, introduced an environmental, social, and governance-related disclosure regime in 2024: the Sustainability Disclosure Requirements that will affect both asset managers and distributors.

Morningstar’s separate account and model universes track the discretionarily managed and advisory assets of professional investment managers, mainly including asset management firms, strategists, and third-party providers.

The Market Returns framework provides a consistent, rules-based method for calculating equity returns across multiple time horizons.

The more investors traded, the less they made.

Manager tenure is the length of time that an investment manager or team of managers has been leading an investment fund.

A methodology for better risk-exposure identification in Morningstar risk models.

Morningstar’s estimated cash flows dataset for mutual funds represents a detailed analysis designed to assess the capital contributions and withdrawals made by fund investors while accounting for the reinvestment of distributions.

The paper outlines category definitions applicable to the Spanish market.

Morningstar collects TNA and fund size data while also calculating derived fund size metrics. This document describes both the collected data as well as the calculated metrics.

This paper outlines our asset-allocation models and summarizes the underlying methodology. We discuss the inputs, the resulting portfolios, and their expected risks and return expectations.

The Morningstar Executive Insights dataset offers a comprehensive view of organizational leadership and key personnel, equipping investors and analysts with valuable insights into corporate governance.

This document outlines the logic, rules, and data handling standards used in report-level financial calculations.

Commodity Focus Group and Commodity Focus provide an attribute schema for commodities-focused ETF strategies that is granular enough to capture the diversity of the commodities landscape.

This guide explains the Morningstar approach to capturing key governance functions of investment fund management entities for European markets.

Calculation of Tracking Difference and Tracking Error

Morningstar Category averages are designed to represent the average return of funds within their category over time.

Unlike public investments, private investments, such as private equity and venture capital, are not publicly traded and historically inaccessible to most investors.

The Morningstar Global Equity Risk Model is a multifactor risk model built upon a large universe of global stocks to capture the key drivers of risks in equity markets around the globe.

Once a niche area of the financial system reserved for university endowments and pension funds, private capital markets are opening up to a much broader investor base.

The following document describes the rationale for identifying investments as private and the methodology to calculate the exposure to private assets within a portfolio.

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

An explantion of the rules for the selection of the oldest share class.

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

A sizable literature exists identifying various “factors” that are believed to drive investment risk and return. Morningstar Style Box was an early adopter of factor identification, characterizing fund performance along two dimensions: size and value gro

In this report, we look at how the universe of funds in scope of the ESMA fund naming guidelines has changed in the past 12 months.

Morningstar Sustainalytics’ Portfolio Low Carbon Transition Metrics enable investors to understand the degree to which the greenhouse gas emissions—attributable to a portfolio—differ from its fair-share GHG emissions budget.

Methodology: Version 4.0.

This rating methodology applies to semiliquid funds rated by Morningstar Manager Research analysts.

The Morningstar Medalist Rating for Semiliquid Funds is a forward-looking tool that investors may use to identify strategies with strong or weak performance potential relative to relevant peers and against the backdrop of daily-liquid options.

The Morningstar Fee Level for mutual funds was developed to help investors compare the fees of fund share classes with those of similar funds.

Introduction to EMT.