CHICAGO, Nov. 15, 2011 /PRNewswire/ -- Morningstar, Inc.
(NASDAQ: MORN), a leading provider of independent investment
research, today introduced forward-looking, analyst-driven global
fund ratings for approximately 350 U.S. funds. The Morningstar
Analyst Rating™ for funds supplements the Morningstar Rating™ for
funds, commonly known as the "star rating," which assigns one to
five stars based on a fund's past risk- and load-adjusted returns
versus category peers. In addition, Morningstar launched new,
in-depth Global Fund Reports for a subset of the newly rated
funds.
The new five-tiered Morningstar Analyst Rating scale has three
positive levels-—Gold, Silver, and Bronze—in addition to Neutral
and Negative ratings. Analysts arrive at a rating through an
evaluation of five key pillars they believe are crucial to
predicting the future success of a fund, considering both numeric
as well as qualitative factors: People, Process, Parent,
Performance, and Price. Morningstar analysts score these five
pillars as Positive, Neutral, or Negative, which are then combined
for the overall rating.
The Analyst Ratings are not designed to be a market call on an
asset class or a prediction of short-term performance, and cannot
assess whether a fund is the right fit for an investor's particular
portfolio or risk tolerance.
Morningstar reserves the top three tiers, expressed as medals,
for funds its analyst team thinks have sustainable advantages that
position them well versus peers and/or a relevant benchmark on a
risk-adjusted basis over a full market cycle of at least five
years.
Don Phillips, president of fund
research for Morningstar, said, "The Morningstar Analyst Rating is
an important step in the evolution of our fund research. While the
rating system is new, our analysts have been producing independent
research on funds since the late 1980s. Our quantitative star
rating for funds is a backward-looking achievement test, while the
new Analyst Rating is more of an aptitude test, signaling to
investors our forward-looking perspective on a fund's ability to be
a strong investment option over the long haul. As with the star
rating, the Analyst Rating is intended to supplement, not replace,
investors' due diligence process."
He added, "I started working for Morningstar 25 years ago as our
first fund analyst, and we now we have more than 100 fund and ETF
analysts worldwide. Our analysts are producing a stunning amount of
institutional-quality research that investors and advisors simply
can't find anywhere else. The new ratings and in-depth fund reports
better surface our analysts' opinions of the strengths and
weaknesses of the funds we cover and will help investors identify
funds our analysts think highly of and those we don't."
The new Morningstar Analyst Rating scale is as follows:
- Positive Ratings:
- Gold: Best-of-breed fund that distinguishes itself across the
five pillars and has garnered the analysts' highest level of
conviction;
- Silver: Fund with notable advantages across several, but
perhaps not all, of the five pillars—strengths that give the
analysts a high level of conviction;
- Bronze: Fund with advantages that outweigh any disadvantages
across the five pillars, and sufficient level of analyst conviction
to warrant a positive rating;
- Neutral: Fund that isn't likely to deliver standout returns,
but also isn't likely to significantly underperform; and
- Negative: Fund that has at least one flaw likely to
significantly hamper future performance, and is considered an
inferior offering to its peers.
In the United States, the new
Analyst Ratings replace the company's "Analyst Picks and Pans," a
proprietary list of the most-favorite and least-favorite funds
chosen by Morningstar's analysts in each investment category. The
new ratings represent a more comprehensive effort and expansion of
the Analyst Picks and Pans, by filling in the middle ground of
investment options Morningstar analysts cover.
Morningstar plans to assign its new Analyst Rating to 1,500 U.S.
funds by the end of 2012, focusing on funds that have garnered the
most investor interest and assets, collectively representing more
than 75 percent of industry assets. In addition to the largest
funds, the analyst team will devote a portion of its coverage
universe to smaller funds with distinguishing characteristics.
Initially, there will be more positively rated funds than Neutral-
or Negative-rated funds because the analyst team is prioritizing
funds with the most investment merit and investor interest, which
tends to skew toward higher-quality funds. The ratings distribution
will even out over time as Morningstar's analysts ramp up their
coverage. Approximately 500 of these U.S. funds will have a new,
in-depth Global Fund Report with complete analysis and additional
data available to advisors and institutional investors by the end
of next year.
The new Morningstar Analyst Rating for funds, along with
analysis of the five pillars, is now available on Morningstar's
investment research website for individual investors,
Morningstar.com®. The new Analyst Ratings, supporting analysis, and
Global Fund Reports are available in Morningstar Direct(SM), the
company's web-based global investment analysis platform for
institutional investors; and in Morningstar
Office(SM), a global practice and portfolio management
solution for advisors. Morningstar will roll out the new ratings
and reports in other products over the next several months.
In markets where Morningstar already has analyst-driven ratings,
such as the United Kingdom,
Europe, Asia, and Australia, the new global ratings system
replaces the previous, localized analyst rating scales. The new
ratings for more than 1,000 European and Asian funds will be
available on Nov. 16 on the company's
local investment research websites in Europe and Asia, as well as local advisor and
institutional platforms. Morningstar will transition its rating
scale and report format for funds in Australia and New
Zealand in early 2012, and will also launch the new Global
Fund Reports for European and Asian funds.
Morningstar's fund and ETF analysts cover about 4,400 funds
globally, and the company provides data on nearly 120,000 mutual
fund share classes. For more information about the Morningstar
Analyst Rating for funds, including a fact sheet, video, and FAQ,
please visit
http://global.morningstar.com/AnalystRatingForFunds.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment
research in North America,
Europe, Australia, and Asia. The company offers an extensive line of
products and services for individuals, financial advisors, and
institutions. Morningstar provides data on approximately 330,000
investment offerings, including stocks, mutual funds, and similar
vehicles, along with real-time global market data on more than 5
million equities, indexes, futures, options, commodities, and
precious metals, in addition to foreign exchange and Treasury
markets. Morningstar also offers investment management services
through its registered investment advisor subsidiaries and has more
than $167 billion in assets under
advisement and management as of Sept. 30,
2011. The company has operations in 26 countries.
©2011 Morningstar, Inc. All rights reserved.
MORN-R
Media Contacts:
In Chicago: Margaret Kirch Cohen, +1 312-696-6383 or
margaret.cohen@morningstar.com
In Chicago: Nadine Youssef, +1 312-696-6601 or
nadine.youssef@morningstar.com
SOURCE Morningstar, Inc.