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Morningstar introduce forward-looking Morningstar Analyst Rating for ETFs

Morningstar will initially assign Morningstar Analyst Ratings to approximately 300 ETFs, with coverage expected to expand over time.

Nelly Poon 14/09/16

Morningstar, Inc. announced its plans to apply the forward-looking Morningstar Analyst Rating™ to exchange-traded funds (ETFs) globally, allowing investors to more easily compare investments across fund types. With rollout anticipated later this year, Morningstar will initially assign Morningstar Analyst Ratings to approximately 300 ETFs, with coverage expected to expand over time.

“With ETFs increasingly used strategically to build investment portfolios globally and the range of ETF options continuing to grow, investors need help making informed decisions,” Ben Johnson, Morningstar’s director of global ETF research, said. “Assigning the qualitative Morningstar Analyst Rating to ETFs will help investors assess an ETF’s future prospects based on the fundamental research our analysts conduct. Our independent research and ratings, which we’ve been providing to investors for more than 30 years, will continue to aid due diligence efforts and serve investors’ best interests.”

The Morningstar Analyst Rating is a qualitative rating that signals Morningstar analysts’ conviction in a fund’s ability to outperform relevant peers, including both mutual funds and ETFs, on a risk-adjusted basis over a full market cycle. The Morningstar Analyst Rating follows a five-tiered scale: Gold, Silver, Bronze, Neutral, and Negative. Analysts arrive at a rating through an assessment of five key pillars: parent, people, performance, price, and process.

Johnson added, “We’ve been providing qualitative research and analyst reports on ETFs for more than eight years. Applying our globally consistent Morningstar Analyst Rating methodology to these mainly passive investments is a natural extension of our research process.”

Morningstar’s manager research analysts already publish qualitative ETF analyst reports for more than 650 ETFs worldwide.

 

 

About Author Nelly Poon

Nelly Poon  

Nelly Poon is an editor with Morningstar.