Morningstar is a Chicago-based investment research firm that compiles and analyzes fund, stock, and general market data. They provide an extensive line of internet, software, and print-based products for individual investors, financial advisors, and institutional clients. Their research reaches across the globe, covering North America, Europe, Australia, and Asia. Among their many offerings, Morningstar’s comprehensive, one-page mutual fund and exchange-traded fund (ETF) reports are widely used by investors to assess the investment quality of more than 2,000 funds.
Key Takeaways
- Morningstar is a key player in investment research and financial services, known for its comprehensive investment analysis and fund ratings.
- Billionaire Joe Mansueto founded Morningstar in 1984 and served as its CEO until 2017.
- In 2022, Morningstar expanded its services with the inauguration of its Wealth Management Solutions group.
- Morningstar issues risk ratings, commonly referred to as Star Ratings, for mutual funds and ETFs.
- Risk ratings range from one star (lowest-performing) to five stars (highest-performing).
Understanding Morningstar Inc.
Morningstar is a respected and reliable source of independent investment analysis for all levels of fund and stock investors. Their extensive product range empowers various financial professionals, including individual investors, financial advisors, asset managers, retirement plan providers, and institutional investors.
The data and research provided by Morningstar include insights on investment offerings, managed investment products, publicly listed companies, and real-time market data. Their website offers free information on individual funds and stocks, while complete data is available through subscription services and publications starting at $249 for a one-year membership.
Morningstar also offers investment management services through its advisory subsidiary, managing more than $265 billion in assets. The company operates in 29 countries, continually expanding its reach into new markets.
Morningstar’s Initial Public Offering (IPO)
Morningstar filed for an initial public offering in May 2005 at $18.50 per share using a unique method known as OpenIPO, which provides individual investors with equal access to bid on the stock’s price. Today, Morningstar is listed on Nasdaq under the ticker symbol MORN. As of February 25, 2022, Morningstar’s share price exceeded $281, and its market capitalization was over $12.14 billion.
History of Morningstar
In 1984, stock analyst Joe Mansueto founded Morningstar in response to the growing mutual fund industry and the lack of accessible information for making informed investment decisions. In 2017, Mansueto stepped down as CEO, with Kunal Kapoor succeeding him, while Mansueto continues to serve as executive chairman.
Beyond Morningstar, Mansueto’s business and philanthropic ventures include ownership of the Chicago Fire soccer team and investment real estate firms owning notable properties like the Wrigley Building and the Waldorf Astoria. Since its foundation, Morningstar’s coverage has expanded from 400 investments to over 621,370.
Morningstar remains at the forefront of investment research and management. In 2022, it launched the Wealth Management Solutions group, integrating its past offerings with a comprehensive wealth management strategy.
Morningstar Ratings
Morningstar issues risk ratings called The Morningstar Rating for Funds or Star Ratings for publicly traded mutual funds and ETFs, helping investors make informed decisions.
Ratings range from one star (lowest performers) to five stars (highest performers), based on a fund’s performance against others in its category. These categories group funds by the types of investments they hold. Funds require a three-year performance history to be rated.
Morningstar factors in a fund’s volatility and the level of risk undertaken when assigning ratings. More volatile funds often have lower ratings than those with relatively stable performance.
Special Considerations
Morningstar offers a robust portfolio of products, including professional products, managed investment products, and investor analysis and services.
Professional Products
Morningstar’s professional products feature data, research, and software that enhance and support business operations. Their offerings include marketing and reporting solutions, global exchange data, investment planning services, and more, along with ratings services for financial institutions.
Managed Investment Products
Morningstar’s managed investment products feature Morningstar Indexes (used for benchmarking and creation for various financial institutions), Morningstar Managed Portfolios, Advisor Managed Accounts, and other investment management and indexing services.
Individual Investors
For individual investors, Morningstar provides analysis of stocks, funds, and markets, portfolio management resources, and newsletters with investment strategies and other financial content.
In 2021, Morningstar recorded revenues of $1.7 billion, a 22.3% increase from the previous year, although net income dropped by 13.6% to $193.3 million. Key revenue drivers include DBRS Morningstar, Morningstar Data, Workplace Solutions, Morningstar Indexes, and PitchBook.
How Much Is a Subscription to Morningstar Premium?
Morningstar Premium offers several subscription packages. Monthly memberships cost $34.95 per month; annual memberships are $249, biennial memberships are $399, and triennial memberships cost $499.
What Do the Morningstar Stars Mean?
Morningstar rates mutual funds and ETFs’ past performance within their same category. Ratings range from one star to five stars, with one being the lowest rating and five the highest.
What Is a Morningstar Sustainability Rating?
Morningstar’s Sustainability Rating evaluates how well mutual funds and ETFs meet environmental, social, and corporate governance (ESG) standards.
Who Are Morningstar’s Competitors?
Morningstar’s main competitors include Bloomberg L.P., Thomas Reuters Corp., and MarketWatch Inc. Bloomberg offers financial news and market data through various media channels. Thomas Reuters provides financial information and market data to professionals and businesses. MarketWatch offers web-based financial and market analysis.
The Bottom Line
Morningstar is a global leader in investment research and financial services, offering a diverse array of services and products that help educate and equip investors to make proactive, informed decisions. With free and subscription-based content, Morningstar’s continuous expansion underscores its commitment to empowering investor success.
Related Terms: investment analysis, fund ratings, financial advisors, asset management.
References
- Morningstar. “FAQ: What is the price of Morningstar Premium membership?”
- Morningstar. “Press Release 12/31/2021”, Page 6.
- Yahoo Finance. “Morningstar, Inc. (MORN)”.
- Forbes. "#172 Joe Mansueto".
- Chicago Tribune. “Who is Joe Mansueto? Billionaire now owns Chicago Fire soccer team, Wrigley Building and Waldorf Astoria hotel”.
- Morningstar. “About Us”.
- Morningstar. “Morningstar Launches Wealth Management Solutions Group to Connect Capabilities for Advisors”.
- Morningstar. “Morningstar Rating for Funds”.
- Morningstar. “Morningstar News Release”, Pages 2-3.
