Morningstar is a leading provider of independent investment research in North
America, Europe, Australia, and Asia. Our mission is to create great products
that help investors reach their financial goals. We offer an extensive line
of data, software, research, and investment management offerings for financial
advisors, asset managers, retirement plan providers and sponsors, and individual
investors. In addition to our U.S.-based products and services, we offer local
versions of our products designed for investors in Asia, Australia, Canada,
Europe, Latin America, and South Africa. Morningstar serves approximately 250,000
financial advisors, 1,300 asset management firms, 28 retirement plan providers,
300,000 retirement plan sponsors, and 10.1 million individual investors. We
have operations in 27 countries.
Our data and research are core assets that we seek to leverage to build Morningstar's
long-term value. We provided extensive data on more than 500,000 investments,
including mutual funds, stocks, exchange-traded funds (ETFs), closed-end funds,
separate accounts, and variable annuities. We also track real-time market data
on more than 17 million exchange-traded equities, derivatives, commodities,
currencies, and other investments.
Our data and proprietary analytical tools such as the Morningstar Rating for
mutual funds, which rates past performance based on risk- and cost-adjusted
returns, and the Morningstar Style Box, which provides a visual summary of a
mutual fund's underlying investment style, have become important tools that
millions of investors and advisors use in making investment decisions. We've
created other tools, such as the Ownership Zone, Sector Delta, and Market Barometer,
which allow investors to see how different investments work together to form
a portfolio and to track its progress. Our popular Portfolio X-Ray tool helps
investors evaluate their portfolios and get a clear view of their underlying
holdings.
We’ve been providing independent analyst research on mutual funds and
other investment vehicles since the mid-1980s. We use this analyst research
to provide a qualitative, forward-looking Morningstar Analyst Rating for funds.
We now provide research reports and Morningstar Analyst Ratings for approximately
4,600 funds globally, including active, passive, multi-asset, ETF, and closed-end
fund strategies. We also offer qualitative research and ratings on alternative
funds, state-sponsored college savings plan portfolios, and target-date funds.
In 2015, we announced plans to launch the industry's first sustainable investing
metrics for global mutual funds and ETFs. Our new metrics are based on company-level
ratings and research from Sustainalytics, a leading provider of environmental,
social, and governance (ESG) and corporate governance ratings and research.
We have a long tradition of innovative research centered on good stewardship,
lower costs, and more transparency for investors and want to bring even greater
transparency and accountability to the investment industry with information
about sustainability, while helping investors to put their money to work in
ways that are meaningful to them.
As part of our research efforts on individual stocks, we popularized the concepts
of economic moat, a measure of competitive advantage originally developed by
Warren Buffett, and margin of safety, which reflects the size of the discount
in a stock's price relative to its estimated value. The Morningstar Rating for
stocks is based on the stock's current price relative to our analyst-generated
fair value estimates, as well as the company's level of business risk and economic
moat. We offer a variety of other qualitative measures such as Stewardship Grades,
which help investors identify companies and fund firms that have demonstrated
a high level of commitment to shareholders and stewardship of investors' capital.
Our analysts cover approximately 1,500 stocks, using a consistent, proprietary
methodology that focuses on fundamental analysis, competitive advantage assessment,
and intrinsic value estimation. In July 2015, we received the “Thought
Leadership” award at the Investment Week Investment Marketing and Innovation
Awards in London for our independent equity research drawing on our economic
moat methodology.
In addition to our analyst-driven coverage, we provide quantitative ratings
and reports for approximately 40,000 companies globally. These equity ratings
draw on the fundamental research of our equity analyst team and provide a forward-looking
statistical view of the valuation, competitive advantage, and level of uncertainty
for stocks that are often under-followed by other research firms.
Through our Morningstar Credit Ratings, LLC subsidiary, which is a Nationally
Recognized Statistical Rating Organization (NRSRO), we provide new issue and
surveillance ratings and analysis for commercial mortgage-backed securities
(CMBS) and residential mortgage-backed securities (RMBS), as well as operational
risk assessment services.
In addition, we publish credit ratings and associated research on corporate
debt issuers. We currently provide ratings on about 400 issuers. Morningstar,
Inc. is not currently an NRSRO, and our credit ratings on corporate issuers
are not NRSRO credit ratings.
In our investment management business, we've developed in-depth advice on asset
allocation, portfolio construction, and security selection to meet the needs
of investors and professionals looking for integrated portfolio solutions. We’ve
published research on "Gamma," an innovative measure that quantifies
how much additional retirement income investors can generate by making better
financial planning decisions. We use the concept of human capital—or potential
future earning ability—to provide a more complete picture of an investor’s
financial worth and optimize a portfolio’s asset mix.
Our strategy is to widen our economic moat, or sustainable competitive advantage,
and build shareholder value by focusing on our three key objectives. Our investment
data, research, and ratings are at the heart of our strategy, allowing us to
help investors achieve better investment outcomes whether they make their own
investment decisions or outsource management of their portfolios.
Produce the most effective investment data, research, and ratings to help investors
reach their financial goals.
We believe our leadership position in independent investment research offers
a competitive advantage that would be difficult for competitors to replicate.
Our goal is to leverage our proprietary research and intellectual property to
help investors with both decision support (via Morningstar Direct) and outsourced
investment management (via our investment management business).
We’re focusing our research efforts on several different areas, as described
below.
Manager research (including mutual funds, ETFs, separate accounts, and other
vehicles)
Our goal for manager research is to leverage our leadership position to reach
additional customer groups. In contrast to most other companies, we also integrate
manager research with our software, which we believe is another competitive
advantage.
Equity research
Our equity research complements our approach to manager research, where we
focus on analyzing the individual stocks that make up each fund's portfolio.
We had more than 100 equity analysts globally, making us one of the largest
providers of independent equity research. We believe our analysts’ long-term
approach, deep industry knowledge, and focus on sustainable competitive advantage
are important factors that set us apart and help investors achieve better investment
outcomes.
Credit research and ratings
Morningstar Credit Ratings, LLC, our structured credit research and ratings
subsidiary, is a Nationally Recognized Statistical Rating Organization (NRSRO)
that has earned a reputation for innovation and excellence in the structured
finance market.
Morningstar Credit Ratings has submitted a preliminary application to the Securities
and Exchange Commission (SEC) to expand its NRSRO license to include credit
ratings for corporate bonds and financial institutions. We’re seeking
to expand the license because we believe we can make a difference in the market
by bringing transparency, unique perspectives, and superior client service to
all investors across the fixed-income markets.
Holistic advice methodologies (including our research on Gamma and the Total
Wealth Approach)
Over the past several years, we’ve developed new research tools that
provide a more holistic approach to investing and asset allocation. Whereas
traditional asset allocation methodologies focus solely on financial assets
(such as stocks and bonds), we’ve developed methodologies that provide
a more complete view of all sources of wealth, including financial capital,
human capital, housing assets, and retirement and pension benefits.
Develop Morningstar Direct as our flagship decision support platform.
We began rolling out the next-generation version of Morningstar Direct, our
institutional investment research platform.
The new software is designed to be more intuitive, elegant, and easy-to-use.
It provides a more consistent, cohesive experience with a strong emphasis on
Morningstar’s proprietary research and tools. We also improved the underlying
technology, including a more streamlined development process for commonly used
Morningstar capabilities such as portfolio management tools.
The new software is fully web-based, which eliminates the need for desktop software
installations and allows immediate access to new features. It allows to us innovate
more rapidly and more easily configure our software solutions to meet client
needs. It also addresses the growing need for mobile-optimized capabilities
to extend the desktop experience onto mobile devices.
Over time, we expect to migrate many of our core software capabilities to Morningstar
Direct, which will serve as our main platform for clients looking for information
to support the investment decisions they make on their own or validate investment
recommendations from another party. We also plan to expand the user base for
Morningstar Direct by enhancing workflow capabilities for our existing clients
and adding workflows for new types of clients, such as financial advisors.
Build world-class investment management solutions based on our proprietary
research.
We leverage our innovative, proprietary research by building world-class investment
management solutions that help investors achieve better outcomes. Our goal is
to connect our existing capabilities to create holistic solutions that help
financial advisors, asset managers, and individual investors with portfolio
construction, monitoring, security selection, and implementation.
Morningstar Investment Profiles: pre-made or custom-generated investment fact
sheets institutions can use for investor communications;
Morningstar Commodity Data: high-quality market data and analytical products
for energy data management systems, financial and agricultural data management,
historical analysis, trading, risk management and forecasting;
Print and online publications;
ByAllAccounts, which provides innovative data aggregation technology for financial
applications;
Investment conferences;
Morningstar Enterprise Data Management: customized data aggregation and performance
reporting solutions that help clients integrate data more effectively;
Market data and desktop software; and
Other investment software for financial advisors and institutions
4.62%