Rating
4.1

Introduction

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, Asia, and Africa. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets.


Why are mutual funds so popular with long-term investors? It is probably due to the broad diversification and investment minimums that they offer. Therefore, if you are in it for the long haul, you will likely reap great benefits from them.

Do you want to know more about mutual funds? If you do, you should consider trying out Morningstar, which is an online newsletter that provides crucial data on mutual funds, ETFs, bonds, and stocks.

Of course, other websites purport to offer advice on mutual funds, but if you look deeper, they source their data from Morningstar.

If you are wondering what this service is all about, check out the extensive review that we have done on it. In the end, you’ll be better placed to decide whether this service is worth a shot.

About Morningstar

This investment research service provides ratings and other relevant information that would help investors make informed decisions. The main aspect that sets this program apart from other investment advisory services is that its main focus is mutual funds.

Morningstar also deals in bonds and ETFs, but not to the same degree.

The company was founded in Chicago in 1984, and as of March 2018, it had assets worth $201 billion under its management. Further, it has established itself in 27 countries and an employee count of over 5,000.

The service is available in both free and premium packages. You could always make some achievements with the free package, but the latter package has more to offer, including the asset ratings and the screeners. 

So, if you consider yourself an active investor, the premium package would be your best fit.

How the Premium Service Works

This service provides analysis and ratings of mainly mutual funds and other securities such as bonds, stocks, and ETFs. Due to the particular focus on mutual funds, long-term investors would find more value in this service.

You can easily find whatever information you want on different investments, plus there are ratings on mutual funds to enable you to pick the right one for your portfolio.

There are also screening tools designed to help you narrow down the ideal funds to invest in.

What You Get with the Service

We shall now look at the tools and features that help you get the best out of this service. Let’s check them out in detail.

I) Rating List

This is one of the top highlights of this service. The analysts running the site predict the best security, i.e., mutual funds, ETFs, and bonds, before updating a list on the main website.

Although this list makes it easier for you to find the ideal investment opportunity, you should always make a point of conducting your independent research.

The rating we are talking about here is a five-star system that is used to rank mutual funds. The ranking is based on performance, and the top 10% gets a 5-star rating. On the other hand, the bottom 10% receives a 1-star rating. So, a higher rating indicates better performance.

Note that mutual funds need to have a track record of at least three years to qualify for this rating.

There is also a tiered scale rating, where the analysts base their ratings on a forward-looking analysis rather than the performance. Here, the analysts look at other factors such as the mutual fund’s parent company and price before predicting whether it has a promising future.

Another rating list that this service offers is for stocks, and in this case, you get two lists. They are the “Wide moat + undervalued” and the “5-star stocks.” These two lists focus on stocks with competitive pricing relative to their normal market value.

You may find other lists that include those for high-yield bonds, bond index funds, core bond funds, and foreign bonds. These lists are more beneficial for newbie bond investors than the established traders.

II) Fund Screener

The next feature to look at is the screener, whereby Morningstar offers you a free screening tool, which is basic, and one for the premium subscribers, which is an advanced screener.

This screener is the ideal place to start your research, and you can use it to build a list of funds that you find interesting. Once you are done creating your list, always do further research before making an investment decision.

The fund screener offers you the flexibility to build one screen parameter at a go, and you get to choose a factor on a fund to determine what passes through your screen.

As for the premium fund screener, the results displayed are customizable, plus you can add other columns to the results table. This makes it easier for you to sort data based on criteria that you find relevant.

And if the need arises, you can export the results to Excel for further analysis.

III) Cost Analyzer

The cost analyzer is a tool that will help you compare mutual funds. All you need to do is enter multiple mutual funds, and it will send back information on how much they will cost. This price is based on a certain starting investment and recurring investments.

This feature is crucial if you are in it for the long haul since it gives you a hint of how a fund is likely to perform in the coming years.

Although the analyzer is limited to premium subscribers, you could always go for the numerous free analyzers available online.

IV) Similar Fund

Have you been impressed with the fund that you have invested in? If you are, here is a feature that may help you find similar funds that you may also invest in. the process of finding this fund is very straightforward.

All you will do is enter the name of the mutual fund into the similar fund finder. The service will then return a list of similar funds, which you can then sort based on different criteria. The basis could be on similarity in performance, operations, risks, and expenses.

If you are a mutual fund investor looking to diversify your portfolio with similar funds, this is a tool that you will appreciate a lot. This is because it would help you find other funds that match your investment style.

In some cases, the finder may help you locate funds that perform better than your existing ones.

V) Premium Articles

Since Morningstar is an educational resource, it aims to boost your knowledge in investments to the maximum. So, the service posts new articles every day that have been written by the team of analysts running the program.

The articles mainly focus on stock and mutual fund picks, including the best buys in a particular industry.

Some articles can be accessed by non-subscribers, while some are limited to premium subscribers only.

VI) Portfolio Manager

The manager gives you an overview and allows you to keep track of your investments. This way, you can evaluate their performance, create a strategy, plus you may also create a watch list with potential opportunities.

A major plus of this feature is that it gives you easy access to the overview table reports. This way, you can have an easy time evaluating your investments’ performance before deciding on your next move.

VI) Portfolio X-ray

The main challenge you are likely to face as an investor who has invested in multiple mutual funds is the inability to gauge their performance against other holdings in your portfolio. Luckily, the portfolio x-ray is a feature designed to help you beat this problem.

Morningstar uses each fund’s quarterly SEC reports to determine your true asset allocation. This method will help you see how your portfolio performs against other companies and sectors in your portfolio. Further, you can now easily point out the areas that seem too weighted.

From the information you have gathered here, you can make the necessary adjustments that would enable you to maximize your returns while reducing your investment risks.

The only issue we found with this feature is the manual process involved, which may easily tire you out. If only the company could iron out this issue, it would be a flawless part of the program.

VII) iPhone/iPad Apps

A convenient aspect of this service is that you do not have to confine yourself behind the computer screen all day long. You have the option of downloading the Morningstar app for free on your iPhone or iPad.

With this app, you should have no problem accessing your investment portfolio overview for quick analysis. However, this app’s information is limited compared to what you can find on the main website.

VII) Personal Capital Integration

This is a bonus service that is only available to premium subscribers. If your portfolio has assets worth over $100,000, you will have a one-on-one financial review with a licensed personal capital advisor.

Additionally, you will also get access to Personal Capital tools to help you keep track of and manage your investments.

Keep in mind that you can access this feature without going through Morningstar since it is available to any new subscriber to Personal Capital with over $100,000 in linked assets.

VIII) The Customer Service

Truth be told, not every feature that you find in this program will be easy to use. Some of the problems you are likely to encounter are membership issues and site navigation. Luckily for you, there is a competent customer support team that you could always turn to for help.

The FAQ page is the first support tool that you will find, and it is divided into the following sections:

  • Technical
  • Membership
  • New site navigation
  • Missing features
  • Rating changes
  • Fund quote

In case you have any other issues besides the ones listed above, there are an email address and a phone number that you could use to connect with the support team.

The Pricing

If you are interested in this service, there are two pricing options that you could use, i.e., free and premium.

1. Free

As you would expect, this plan gives you access to features that you would find useful as a beginner. Every feature in this package is free but at a limited capacity.

We need to point out that all the revenue in this version is generated from paid advertisements.

2. Premium Plan

This version will give you full access to all the features that this program has to offer. Whether it is the screeners or rating list, this plan will have you covered in every aspect.

Since it allows for non-limited use of its features, this version would be the perfect fit for active and advanced investors.

The premium version is available at $29.95 per month or $199 a year. You also get a 14-day free trial, after which you decide whether the program has what you are looking for.

3. Promotional Offer

Besides the 14-day trial, Morningstar runs limited promotional offers on their prices, where you could end up saving a big portion of your membership fees.

The offers include:

  • $30 off the annual membership
  • $70 off the two-year membership
  • $100 off a three-year membership

Who wouldn’t be enticed by this deal?

Who is the service most suited for?

Morningstar is the perfect fit for long-term investors who mainly focus on mutual funds but want to diversify their portfolios. The service has a ratings feature that helps you point out the most promising investments, while the screener helps you narrow down your search to the right security for you.

Stock traders may also use the service, but they are likely to find more value in other services such as Motley Fool’s Stock Advisor or IBD’s Leaderboard. 

Pros and Cons

This is a pretty amazing service that has its fair share of drawbacks. Let’s briefly check the advantages and disadvantages of the program.

Pros

  • Gives you access to premium articles that offers fund recommendations
  • The analyst-backed ratings help you in making sound investment advice
  • Premium fund screener is highly customizable
  • Weekly ratings give you ample time to expand your research
  • Similar fund feature helps you diversify your portfolio with funds that portray the same qualities as the ones on your portfolio

Cons

  • Exporting the data to excel is not easy
  • Limited stocks and ETF tools

Closing Thoughts

If you have been wondering what Morningstar is all about, we hope that our article has made things easier for you. It is an excellent tool to invest in if you are a mutual funds investor or someone simply looking to diversify their portfolio.

Let’s also mention that both beginners and advanced mutual fund investors would find this program very useful.

Our advice to you is that you should try it out, and you can be sure that your journey in the mutual funds market will never be the same again.