What Is Morningstar Inc.?
Let me tell you about Morningstar Inc. – it's a Chicago-based investment research firm that compiles and analyzes data on funds, stocks, and the broader market. They offer a wide range of products, including internet-based tools, software, and print materials, all designed for individual investors, financial advisors, and institutional clients.
Their research extends globally, covering North America, Europe, Australia, and Asia. One of their standout offerings is the comprehensive one-page reports on mutual funds and ETFs, which investors use to evaluate the quality of over 2,000 funds – even sources like The Motley Fool rely on them heavily.
Key Takeaways
Morningstar functions as an investment research and financial services firm, delivering analysis, fund ratings, and various professional services. Billionaire Joe Mansueto founded it in 1984 and led as CEO until 2017. In 2022, they introduced the Wealth Management Solutions group to enhance their offerings with more integrated wealth management. They provide risk ratings, known as star ratings, for mutual funds and ETFs, ranging from one star for the lowest performers to five for the highest.
Understanding Morningstar Inc.
You can count on Morningstar as a reliable source of independent investment analysis, suitable for everyone from beginners to experts in funds and stocks. Their products support a variety of users, including individual investors, advisors, asset managers, retirement plan providers, and institutions.
The data they provide includes insights on investment options, managed products, public companies, and real-time market updates. On their website, you'll find free info on specific funds and stocks, but for complete access, subscriptions start at $249 for a year, and their publications are available through terminals like Bloomberg and FactSet.
Beyond research, Morningstar offers investment management via its advisory subsidiary, handling over $265 billion in assets. They're expanding into new markets and now operate in 29 countries.
Morningstar’s Initial Public Offering (IPO)
Morningstar went public in May 2005 with an IPO at $18.50 per share, using the OpenIPO method – a unique approach similar to Google's, which treats all bids impartially and gives individual investors equal bidding access.
Today, you can find them listed on Nasdaq under MORN. As of February 25, 2022, the share price exceeded $281, with a market cap just over $12.14 billion.
History of Morningstar
Joe Mansueto started Morningstar in 1984 after leaving his stock analyst job, recognizing that investors needed better information amid the shift from defined benefit pensions to defined contribution plans in the mutual fund industry.
In 2017, he stepped down as CEO, handing over to Kunal Kapoor, while retaining his role as executive chairman with over half the shares. Outside the company, Mansueto has ventures like owning the Chicago Fire soccer team and acquiring properties such as the Wrigley Building and Waldorf Astoria in 2020.
From covering just 400 investments initially, Morningstar now analyzes over 621,370. They're still leading in research and management, and in 2022, they launched the Wealth Management Solutions group to provide more integrated services.
Morningstar Ratings
Morningstar assigns star ratings to mutual funds and ETFs to guide your investment decisions. These range from one to five stars, based on performance against peers in the same category, requiring at least three years of history.
They factor in volatility and risk – more volatile funds get lower ratings compared to those with steadier performance.
Special Considerations
Morningstar's portfolio includes professional products like data, research, and software for business operations, along with marketing solutions, global data, and rating services for institutions.
For managed investments, they offer indexes for benchmarking, managed portfolios, advisor accounts, and other services. Individual investors get stock and fund analyses, portfolio tools, and newsletters on strategies.
In 2021, revenues hit $1.7 billion, up 22.3% from the prior year, though net income dropped 13.6% to $193.3 million. Key revenue sources include DBRS Morningstar, data services, workplace solutions, indexes, and PitchBook.
Subscription Details and Ratings Explained
For Morningstar Premium, you have options: monthly at $34.95, annual at $249, biennial at $399, or triennial at $499.
The stars rate past performance relative to category peers, from one (lowest) to five (highest). There's also a Sustainability Rating that assesses ESG standards in funds and ETFs.
Who Are Morningstar’s Competitors?
Morningstar competes with Bloomberg, L.P., a New York media company offering financial news and data; Thomson Reuters Corp., a Canadian firm providing market info for professionals; and MarketWatch Inc., which delivers web-based financial analysis.
The Bottom Line
In summary, Morningstar is a global firm offering research, services, and products to help you and other professionals make informed investment and business decisions. Content is free or via subscription, and they're continually expanding to support investor success.
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