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 paper contains data and product information about Morningstar Australia After-tax Performance Calculation Methodology

Quality recommendations for current income and income growth from stocks.

The Morningstar Portfolio Product Involvement metrics measure a portfolio’s exposure to involvement in a range of products, services, and business activities. The metrics are holdings-based calculations that use company-level analytics from Sustainalytic

Investing in the wide-moat stocks of today and tomorrow

Investing in the wide-moat stocks of today and tomorrow

Fixed-income analysis is inherently an exercise in the measurement of future cash flows. Payments of interest on principal invested constitute the primary means of return to fixed-income investors with the expectation that the principal will be repaid up

To provide fixed-income investors with meaningful information about the credit risk in managed investment portfolios, Morningstar calculates a holding-weighted measure of exposure measured by credit-rating categories called the Credit-Rating Breakdown.

Introduction to Morningstar fixed-income calculations.

For managed investments such as mutual funds, Morningstar calculates average effective maturity. This measure is the holding-weighted average of the terms of the individual instruments within the portfolio. With this measure, investors can analyze exposu

For investment portfolios that hold meaningful levels of fixed-income holdings, Morningstar produces a number of calculated fixed-income analytic measures. Portfolio analytic measures are created by first calculating corresponding holding-level measures

Quality recommendations for current income and income growth from stocks.

The Global Risk Model helps you identify and assess the amount of risk in your investments.

After four months during which U.S. and international-equity funds attracted similar inflows, international equity took the lead in the equity space with a little over $21 billion in total flows. U.S. equity's winning streak seems to have waned, as the c

A rational approach to asset allocation.

Quality recommendations for current income and income growth from stocks.

Morningstar Category classifications sorts portfolios into peer groups based on their holdings. The categories help investors identify the top performing funds, assess potential risk, and build well-diversified portfolios. Here is how those categories ar

Morningstar Europe, Asia and South Africa Category definitions for managed investment portfolios

Morningstar Category classifications sorts portfolios into peer groups based on their holdings. The categories help investors identify the top performing funds, assess potential risk, and build well-diversified portfolios. Here is how those categories ar

Morningstar U.S. Category definitions for managed investment portfolios

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

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

The paper outlines category definitions applicable to the Indian market.

The paper outlines category definitions applicable to the Mexican market.

The paper outlines category definitions applicable to the Mexican marke

Investing in the wide-moat stocks of today and tomorrow

Some Flows Are Going Into Equity, but Fixed Income Is Still in the Lead Taxable-bond funds attracted the highest inflows once again in March, even higher than they had in February. The flow this month was almost evenly distributed between active and pass

A rational approach to asset allocation.

The Morningstar Style Box™ was introduced in 1992 to help investors and advisors determine the investment style of a fund. It provides an intuitive visual representation of style that helps investors build better portfolios and monitor them more precisel

A rational approach to asset allocation.

Quality recommendations for current income and income growth from stocks.

This document details the methodology behind the Morningstar Rating for stocks, which offers investors and advisors a tool to assess an equity's intrinsic value against its current market price.

This methodology describes Morningstar’s approach to issuing letter-grade ratings for commercial mortgage-backed securities at issuance and during surveillance.

Bonds Still in Favor, With U.S. Equity Close Behind Taxable-bond funds remained the undisputed favorites in February, attracting $35.5 billion in estimated net flows. U.S. equity funds, however, received double the flows they had taken in the previous mo

A rational approach to asset allocation.

Investing in the wide-moat stocks of today and tomorrow

Quality recommendations for current income and income growth from stocks.

Any new beginning is uncertain, and this held true for markets in the first month of 2017. The new president’s promises of tax cuts and infrastructure spending appeared to spur newfound confidence in U.S. equities late last year, driving flows into U.S.-

A rational approach to asset allocation.