Morningstar® Adds Pioneering Asset Allocation Functionality to Morningstar Direct™ Platform for Institutions

TORONTO, Nov. 21, 2011 /CNW/ - Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has added pioneering asset allocation optimization functionality to Morningstar Direct™, the company's web-based global investment analysis platform for institutional investors.

The new functionality is based on extensive research from Morningstar and its European quantitative research director, Paul D.Kaplan, Ph.D, CFA. It facilitates the creation of optimal asset allocation strategies that can take into account "fat-tailed" return distributions and downside risk measures.

"This is portfolio construction for the 21st century," said Dr. Kaplan. "These additional optimisation tools will assist professional investors in their design of superior asset allocation strategies, supported by a methodology that is among the most innovative available today. Whilst traditional portfolio optimisation still has its place, it cannot take into account extreme asset class return distributions, and can only optimise asset mixes for one risk metric and one reward metric. In our view, access to both traditional and newer optimisation techniques gives portfolio managers the breadth of analysis they need to design portfolios that are better suited to real-world returns and focus on the goal of long-term wealth creation."

Fat-tailed distribution modelling accommodates the possibility of extreme market events occurring during the lifespan of an investment strategy—such as the crash of 2008—and the resulting impact on returns. It does this through an underlying distributions methodology that is better able to draw on real-world historical asset class returns than would be available through traditional distribution models. New additional risk measures included in the new functionality are downside deviation and conditional value at risk (CVaR), which measures how extensive losses can be during extreme events.

For more information about the new Morningstar Direct asset allocation functionality, please visit www.global.morningstar.com/Tails_Intl.

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.

SOURCE Morningstar Research Inc.

For further information:

Media Contact:

Jaime Aitken, +1 416 484-7868 or jaimelyn.aitken@morningstar.com


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