TORONTO, Nov. 15, 2011 /CNW/ - Morningstar Research Inc., a Canadian subsidiary of Morningstar, Inc.
(NASDAQ: MORN), a leading provider of independent investment research,
today introduced forward-looking, analyst-driven global fund ratings
for approximately 150 Canadian funds. The Morningstar Analyst RatingTM for funds supplements the Morningstar RatingTM 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
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:
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
Bronze: Fund with advantages that outweigh any disadvantages across the
five pillars, and sufficient level of analyst conviction to warrant a
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
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.caTM and in Morningstar DirectSM, 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.
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©2011 Morningstar, Inc. All rights reserved.
SOURCE Morningstar Research Inc.
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