Morningstar Introduces Forward-Looking Morningstar Analyst Rating™ for Funds and Global Fund Reports
November 12 2011 - 4:38AM
PR Newswire (Canada)
TORONTO, Nov. 15, 2011 /CNW/ - Morningstar Research Inc., a
Canadian subsidiary of Morningstar, Inc. , a leading provider of
independent investment research, today introduced forward-looking,
analyst-driven global fund ratings for approximately 150 Canadian
funds. The Morningstar Analyst Rating(TM) for funds supplements the
Morningstar Rating(TM) for funds, commonly known as the "star
rating," which assigns one to five stars based on a fund's past
risk and return versus category peers. 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 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: o Gold: Best-of-breed fund that
distinguishes itself across the five pillars and has garnered the
analysts' highest level of conviction; o 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; o 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 Canada, the new Analyst Ratings replace the company's "Fund
Analyst Picks," a proprietary list of the most-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, by filling in the middle ground of investment
options Morningstar analysts cover. 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.ca(TM) and in Morningstar
Direct(SM), the company's web-based global investment analysis
platform for institutional investors. In December, the new Analyst
Ratings for Canadian funds will be available in Morningstar®
PALTrak®. The new Global Fund Reports for funds available for sale
in Canada will be available in early 2012. Morningstar will roll
out the new ratings and reports in other products over the next
several months. Morningstar Canada will also be publishing updated
Stewardship Grades for 2011, designed to help investors identify
and compare fund companies that do a good job—or a poor job—of
aligning their interests with those of fund unitholders.
Stewardship Grades have been updated for 26 Canadian fund
companies. Of the 26 firms graded, Morningstar identified four
companies as industry leaders in terms of stewardship with an A
grade, while no fund firms received an F. The Stewardship Grade
goes beyond the usual analysis of strategy, risk, and return. It
helps investors assess funds based on the manner in which funds are
run; the degree to which the management company's interests are
aligned with those of unitholders; and the degree to which
unitholders can expect their interests to be protected from
potentially conflicting interests of the management company.
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. Morningstar
Research Inc. CONTACT: Media Contacts:In Chicago: Margaret Kirch
Cohen, +1 312-696-6383or margaret.cohen@morningstar.comIn Toronto:
Jaime Lyn Aitken, +1 416 484-7868or jaimelyn.aitken@morningstar.com
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