Morningstar Review 2024

Morningstar Video Review

What is Morningstar?

Morningstar is a leading investment analysis platform established in 1984 in Chicago, primarily focusing on stocks, ETFs, and mutual funds. Initially renowned for its unbiased mutual fund research, the company has since broadened its influence, becoming essential for both novice and expert investors.

The platform boasts a dedicated team of over 5,000 professionals across 27 countries, rigorously analyzing over 620,000 investments.

With a remarkable asset management of more than $215 billion and revenues surpassing $1.7 billion, its prominence in the investment world is solidified. A significant portion of their income stems from institutional and professional investors.

Additionally, the “Morningstar Premium” service provides individual investors with updated insights on diverse investment opportunities, from stocks to bonds.

Morningstar Review 2023 | Is Morningstar Right for Me?

Morningstar is a highly regarded investment research platform for research and analysis of the market. It’s often considered best for value investors who aim to buy and hold fundamentally sound companies and funds over the long haul (think Warren Buffet-style investing).

That said, it’s also great for active investors who want to stay up on the latest market data and research. In general, its robust and comprehensive platform is useful for any investor, which is why it’s used by top investment firms.

Morningstar offers a Basic (i.e. free) plan as well as a Premium plan (“Morningstar Investor”). Read on to learn more about these plans and what they offer.

External Morningstar Reviews & Ratings

Firsthand User Experience with Morningstar

Here are some reviews from traders who have experienced the platform firsthand:

How You Can Save on Morningstar Investor

First, a quick note on how you can save on Morningstar Investor, as it isn’t exactly cheap. Fortunately, Morningstar offers a few ways for you to save.

For one, and this is true of many investment services, you will get a better deal by paying annually or for a multi-year subscription than if you pay monthly. Of course, you need more capital to do so, but you can save substantially this way.

For example, paying yearly for Morningstar Investor will cost you $249, which breaks down to just under $21 a month. This is a 41% savings compared to the monthly fee of $34.95, which comes out to just under $420 per year.

Modest Money readers can save an additional $50 on the annual plan by signing up with this exclusive link and using coupon code MM50, which reduces the cost to $199 for the first year.

Students can save even further, reducing the cost of the annual plan to a mere $25 for the first year. You will need a valid .edu email address, however, to qualify for the 90% student discount.

Regardless of the Morningstar Investor plan you end up going for, you can take advantage of their trial offer first. Currently, Morningstar offers a seven-day free trial, giving investors some time to decide how they like it before committing.

How Does Morningstar Work?

Morningstar is a fairly straightforward platform. The site provides analysis, including ratings, of a huge number of stocks and funds. You will often see Morningstar’s ratings used by other investment firms, such as Charles Schwab, for example.

Morningstar leans to the fundamental investing side of things rather than the technical analysis side. Whereas technical analysis is all about interpreting charts, fundamental investing prefers to base investment decisions on a company’s financials.

Morningstar provides high-quality, market-leading data and analysis, which is why it’s trusted by the world’s top investment firms. You can simply type in the symbol of a given security (stock, ETF, or mutual fund) and you’ll see a ton of information at a glance, allowing you to quickly gauge a given asset’s promise as an investment.

Some of the information provided here includes a comparison of the asset’s financials with competitors, current market price versus its “fair value,” its economic moat, and its management (or “stewardship”).

It’s important to note that while Morningstar does provide stock ratings, it doesn’t necessarily do all the work for you. You need to spend time with the information and analysis provided and come to your own decisions. In this way, it’s different from a stock-picking service like The Motley Fool.

Now let’s take a more in-depth look at Morningstar’s top features.

Morningstar Features

Morningstar Ratings

Morningstar’s rating system is found across the financial world because of Morningstar’s strong track record. On a scale of 1-5, Morningstar assigns a rating to thousands of mutual funds. This score is derived from the fund’s risk-adjusted historical return and is algorithmically chosen. Depending on your preferences, this nonhuman component may be a positive or a negative.

In any case, since the ratings are derived from past performance, they should be taken with a grain of salt.

Security Analysis

Morningstar offers detailed investment analysis. Their Full Analysis report dives deep into a company’s current status and its potential future. This report covers areas like the company’s strategy, economic standing, potential risks, and overall value. If you have a Premium membership with Morningstar, you also get a star rating for the investment.

For smaller companies that don’t have detailed analyst reports, Morningstar uses Quantitative ratings. This means they compare the company to similar businesses in its industry.

Furthermore, Morningstar has over 150 analysts who give insights on mutual funds, stocks, and ETFs. They rate these investments from Gold to Negative, indicating their potential performance. Gold, Silver, or Bronze means the analyst believes it will do well over time, while Neutral and Negative suggest uncertainty.

Morningstar also offers lists of top investment recommendations, sorted by type and financial goal.

Portfolio Management

Morningstar’s Portfolio Manager is another huge benefit of Morningstar Investor (again, fka Morningstar Premium).

The Portfolio Manager tool analyzes your portfolio and helps measure your diversification, your asset and sector allocations. It also provides indicators for how to optimize your diversification as well as tools for tracking your financial goals.

The Portfolio X-Ray offers a robust array of tools to help you find the allocation mix that’s right for your investment goals and risk tolerance. As the name suggests, the Portfolio X-Ray peels back the layers of your portfolio so you have access to a detailed analysis of your current assets, such as expense ratios.

The Portfolio X-Ray does this in part by looking beyond the stocks that you hold outright, but also the stocks held by any of the funds you own. For example, if you own GOOG stock but also hold GOOG in an ETF (Exchange-traded Funds), most tools would only display the GOOG shares held outright. This would mean inaccurate results when looking at your asset allocation, and trying to determine concentrated positions.

The Portfolio Manager is excellent when paired with the Watchlist feature. Together, you can directly compare assets you own to replacement funds you’re considering, and use the aggregated data to make your investment decisions.

Unlike some alternative planning tools, the Morningstar Investor Portfolio presents data in an easy-to-understand pie chart, which is helpful for those who prefer visual displays to text-only ones.

Stock and Fund Screeners

The global stock market is overwhelmingly large, with tens of thousands of securities. Morningstar helps you cut through the bulk of assets by allowing you to screen stocks and funds with a wide range of filters.

The screeners are among Morningstar Investor’s best tools, as it allows users to easily narrow down a huge number of stocks to those that they want to buy or follow. The star rating system makes it easy to sort through stocks, and you can quickly learn more about a particular stock’s performance with a simple click.

The feature offers screeners for both stocks and funds. However, you’re only able to screen stocks using the metrics provided by Morningstar (such as financials or analyst ratings).

Mobile App

Morningstar offers a mobile app for iOS and Android devices. The Android version is listed as “Morningstar Portfolio Manager” in the Play store, while the iOS version is listed as “Morningstar For Investors” in the App Store.

Both apps offer the same functions, which are unfortunately rather limited when compared to the website version. On the app, you will only be able to view your current portfolio and watchlist portfolios. For quick analysis of a given stock or fund, or to check on your portfolio, the app is fine. But for in-depth research, the website is much better.

Educational Resources

Morningstar Premium equips its users with an array of learning tools. Notably, the firm offers practical resources like the “Morningstar Investing Classroom,” an independent learning module tailored for those eager to understand investment strategies. This is complemented by worksheets designed for various financial tasks, including budgeting, setting objectives, and net worth calculations. In addition to these tools, Morningstar Premium has established a comprehensive repository of articles.

These articles cater to various financial sectors, encompassing tax strategies, individual finances, retirement preparations, and strategies for college savings, ensuring users are well-guided in their financial endeavors.

Partnership With Empower

Collaborating with Empower, new subscribers to Morningstar Premium can opt for a personalized financial consultation with a certified financial consultant, provided they have a portfolio of at least $100,000.

For those keen on Empower, you can register directly with them. Regardless of whether you hold assets worth $100,000, their complimentary tools are available for use.

Understanding Morningstar’s Star Rating System

Morningstar’s Star Rating System is a well-respected and influential tool in the investment community. Let’s dive into what these ratings mean, how they are calculated, and how investors can effectively use them to guide their decisions.

What are Morningstar Star Ratings?

Morningstar assigns a rating of one to five stars to mutual funds and ETFs based on their past performance. These star ratings are designed to be a quick tool to evaluate the historical risk-adjusted returns of a fund relative to others in its category.

How are Star Ratings Calculated?

The star rating is derived from a fund’s Morningstar Risk-Adjusted Return, which accounts for both the return and risk of a fund. The top 10% of funds within a category receive five stars, the next 22.5% receive four stars, the middle 35% receive three stars, the next 22.5% receive two stars, and the bottom 10% receive one star.

It’s important to note that these ratings are based on past performance, which is not indicative of future results. The ratings are recalculated monthly and can change over time as the fund’s performance fluctuates.

How to Use Star Ratings?

While star ratings can provide valuable insights, they should not be the sole determinant of your investment decisions. Instead, they can serve as a starting point for further research into a fund’s performance, portfolio holdings, management, fees, and risk characteristics.

Investors can also compare the star ratings of similar funds within a category to gauge how well a particular fund has performed relative to its peers.

It’s worth noting that a high star rating does not necessarily mean a fund will be a good investment for your specific situation. Your personal investment goals, risk tolerance, and time horizon should always be taken into account when making investment decisions.

Remember, Morningstar’s star ratings are a retrospective assessment. They can help you understand how a fund has navigated different market environments in the past but are not predictive of how a fund will perform in the future.

While Morningstar’s Star Rating System can be a valuable tool, it should be used in conjunction with other investment research and analysis. Comprehensive due diligence is key to making informed and successful investment decisions.

Can Morningstar Ratings Be Trusted?

Morningstar, known for its investment research, provides ratings on mutual funds and ETFs. Many investors, not always experts, depend on these ratings when making decisions. The Financial Industry Regulatory Authority (FINRA) also uses Morningstar’s insights. However, it’s essential to remember that no system, including Morningstar’s, is perfect.

Their five-star rating system, though easy to understand, can sometimes oversimplify investments. From 1998 to 2010, data showed that funds with higher Morningstar ratings attracted more investments. In contrast, those with lower ratings saw less investment. This trend indicates that the market heavily reacts to Morningstar’s views.

However, attracting more money doesn’t necessarily mean a fund will perform well. It’s common for a high-performing fund to get lots of investments and then not meet expectations. Morningstar itself has said that its ratings, based on past data, shouldn’t be the sole criteria for investors. Notably, some top-rated funds in 2004 lost their high ratings by 2014. And, surprisingly, some lower-rated funds have outdone their peers.

While many trust Morningstar’s ratings, they primarily reflect past performances. The company itself suggests their ratings don’t predict future results.

Morningstar Investor Pricing & Plans

Morningstar Investor is Morningstar’s primary offering. Here is a quick price breakdown:

• Monthly | $34.95/month ($420 annually)
• Annually | $20.75/month ($249 annually)
• Free 7-day Trial

Discounts are also available for students and through our exclusive link.

What does Morningstar’s Basic Plan Offer?

Morningstar Basic plan, which is free, lacks many of the benefits of Morningstar Investor. (No surprises there.) With the Basic plan, you will have access to Morningstar’s editorial articles, but most of the planning and investing tools will be unavailable or severely limited.

Upgrading to Morningstar Investor provides the full range of features (a few of which are outlined above).

Who is Morningstar Best For?

Morningstar is an excellent investment research platform for various types of investors. However, certain investor profiles may find it more useful and relevant. Here are some investor types who can benefit the most from Morningstar:

• Value Investors: Morningstar is ideal for value investors who prefer to buy and hold fundamentally strong companies for the long term. With its focus on in-depth financial analysis and comprehensive data, Morningstar helps value investors identify undervalued stocks and funds.
• DIY Investors: Do-it-yourself investors who enjoy researching and making their own investment decisions will find Morningstar’s tools and resources invaluable. The platform offers a wealth of information, including analyst reports, ratings, and financial data to help DIY investors make informed decisions.
• Long-term Investors: Morningstar’s focus on fundamental analysis makes it a great fit for long-term investors. The platform offers resources and tools that can help investors build a well-diversified and balanced portfolio, which is crucial for long-term success.
• Intermediate to Advanced Investors: While Morningstar offers a wealth of information, it may be overwhelming for complete beginners. Intermediate to advanced investors with some investing experience will be better equipped to leverage the platform’s comprehensive research and analysis tools.
• Investors Seeking Portfolio Management Tools: Morningstar’s Portfolio Manager and Portfolio X-Ray features allow investors to analyze their portfolios in-depth, track their financial goals, and optimize their asset allocation. These tools can be incredibly valuable for those looking to actively manage and fine-tune their portfolios.
• Investors Focused on Mutual Funds and ETFs: Morningstar’s rating system and research reports are well-regarded in the investment industry, particularly for mutual funds and ETFs. Investors who prioritize these investment types will find the platform’s analysis and recommendations beneficial. Those focused on individual stocks, may consider looking elsewhere.

Ultimately, Morningstar is for any trader or investor who wants comprehensive and robust market data and analysis at their fingertips. While Morningstar leans more toward fundamental analysis than technical analysis, day and swing traders can still benefit from Morningstar’s leading investment information and tools.

Who Should Avoid Morningstar?

Morningstar Investor is best suited for intermediate to advanced investors, as well as investors who are fairly active.

People who can probably do without Morningstar Investor are those who prefer technical analysis and day trading, as well as those investors who have decided to stick with one investment strategy until retirement (and beyond).

Ultimately, Morningstar provides a lot of information, analysis, and ratings, but it’s best if investors use this information and analyze it themselves. Morningstar isn’t a stock-picking service like The Motley Fool. People who want to be told which stocks to buy are better off using that service or a similar one.

How to Make the Most of Morningstar Investor

Navigating the vast array of features offered by Morningstar Investor can initially seem daunting. To help you make the most of your subscription, here are some tips and tricks.

Dive Deep Into Analyst Reports: Morningstar’s in-depth analyst reports provide a wealth of information about specific stocks, ETFs, and mutual funds. These reports include a thorough assessment of the investment’s fair value estimate, economic moat rating, and the risks involved. Making time to thoroughly read these reports can provide valuable insights that can influence your investment decisions.

Use the Portfolio Manager: The Portfolio Manager tool is excellent for keeping track of your investments. It provides an overview of your portfolio’s performance and allows you to track progress towards your financial goals. Furthermore, it can analyze your asset allocation, helping you identify areas where you may be over- or underexposed.

Leverage the Portfolio X-Ray: This feature allows you to dive even deeper into your portfolio. It takes into account the holdings within your mutual funds and ETFs, giving you a clearer picture of your actual asset allocation. This can help you spot any potential overlaps or concentrations that may increase your risk.

Utilize the Screeners: Morningstar’s screeners can help you narrow down potential investments based on various criteria. You can filter by asset class, Morningstar ratings, risk level, and more. By using the screeners, you can easily sort through the vast number of investment options available and find those that best meet your investment criteria.

Stay Informed with Articles and Videos: Morningstar offers a plethora of articles and videos covering a wide range of investment-related topics. From market news to investment strategy advice, these resources can help you stay informed and develop a deeper understanding of investing.

Take Advantage of the Watchlist: Morningstar’s watchlist feature allows you to track and monitor potential investments. You can set up alerts to be notified of significant events or changes that could impact these investments.

By using these features and resources, you can extract the maximum value from your Morningstar Investor subscription.

Morningstar Customer Reviews

Overall, Morningstar has received positive feedback from customers. Here is a sampling of customer reviews to provide a better sense of the value Morningstar offers:

Is Morningstar Legit?

In the world of investment research, the legitimacy and reliability of information are crucial. Prospective users often ask the question, “Is Morningstar Legit?” In response to this, it’s important to note that Morningstar is indeed a legitimate and widely-respected investment research firm.

Since its establishment in 1984, Morningstar has built a reputation as a trusted source for independent investment analysis. It is well-regarded within the financial industry, with many professionals and individual investors relying on its comprehensive financial data and in-depth analysis. Morningstar’s services are used globally by leading investment firms, financial advisors, and individual investors.

Morningstar is known for its extensive coverage of a broad range of financial instruments, which exceeds 600,000 investment offerings, including stocks, mutual funds, and ETFs. It’s also famous for its unique star rating system, used to rate mutual funds based on past performance.

Additionally, the company is recognized for its commitment to transparency and objectivity. This is reflected in its independent analysis, detailed reporting, and clearly articulated methodologies. The analysts at Morningstar follow a rigorous research methodology and provide thorough, unbiased reviews on various financial instruments.

Furthermore, Morningstar, Inc. is a publicly traded company, listed on the NASDAQ under the ticker symbol ‘MORN’. This means that it’s subject to regulations and oversight from the Securities and Exchange Commission (SEC), further reinforcing its legitimacy.

However, it’s worth mentioning that while Morningstar’s research is highly regarded, it’s not infallible. Past performance is not a guarantee of future results, and ratings should not be the sole deciding factor when choosing an investment. It’s always a good idea to use Morningstar’s data and research as part of a broader investment decision-making process.

Your Morningstar Alternatives

There are a number of alternatives to Morningstar out there. Other services that provide similar platforms include Simply Wall St and Seeking Alpha.

Check out our full Morningstar vs Simply Wall St and Morningstar vs Seeking Alpha comparisons.

As stated above, however, people looking for a stock-picking service should know that Morningstar does not exist to tell people what stocks to buy. While it does provide rating and analysis, it’s more about providing reliable information so investors can make their own minds up.

For a stock-picking service, you might consider The Motley Fool or one of its competitors. These services deliver stock picks right to your email inbox. So, if you prefer to sit back and receive stock picks rather than do the analysis yourself, those are better options than Morningstar.

Read our full Morningstar vs The Motley Fool comparison

Morningstar Customer Service

Morningstar provides a variety of options for customers who need assistance or have questions about the platform.

• Website: Morningstar’s website has a robust Help Center, where you can find a wide range of articles and guides that answer common questions about the platform. You can also find detailed information about how to use various features of Morningstar.
• Email: You can email Morningstar’s customer support team directly with your queries. Generally, the customer support team is efficient in replying to queries through email. However, the response time can vary depending on the complexity of your question or issue.
• Phone: Morningstar offers phone support during regular business hours. This can be a quick way to get help, particularly for more complex questions or urgent issues.

While Morningstar does not offer 24/7 customer service, their support options are generally well-regarded for their helpfulness and efficiency. Customers have noted that the customer service team is knowledgeable and willing to help resolve issues and answer questions.

However, it should be noted that Morningstar is primarily a research platform, not a brokerage. Therefore, while they can help with issues relating to their platform or data, they cannot provide advice on specific investments or personal financial situations.

Learning and Education

Morningstar offers a wide range of learning and educational resources, which can be particularly useful for new investors or those looking to deepen their knowledge of investing.

• Articles: Morningstar’s articles cover a wide range of topics, from investment strategy and financial planning to market analysis and commentary. These are often written by Morningstar’s team of expert analysts and are generally well-regarded for their depth and quality.
• Webinars and Podcasts: Morningstar offers a series of webinars and podcasts covering various investment-related topics. These can be a great way to learn more about investing and keep up with the latest market trends and insights.
• Morningstar Classroom: This is a free online resource that offers a series of courses on investing. Courses cover a wide range of topics, from the basics of investing to more advanced topics like analyzing financial statements. Each course includes quizzes to test your understanding, and you can earn points for completing courses that can be redeemed for Morningstar Premium features.

Whether you’re new to investing or an experienced investor looking to deepen your knowledge, there’s likely to be something useful for you on Morningstar. However, as with any investment advice or education, it’s important to take into account your personal financial situation and investment goals before making any investment decisions.

Strengths of Morningstar

• Depth of Information: Morningstar provides a wealth of market data, analysis, and research tools, which enables investors to develop a well-rounded understanding of the investments they are considering.
• Independence and Trustworthiness: Morningstar has built a reputation for providing reliable, independent investment research, which helps investors make informed decisions without worrying about biases or hidden agendas.
• User Experience: Many users appreciate the clean, intuitive interface of the Morningstar website, making it easy to navigate and use. The partnership with Sharesight for portfolio performance tracking has also been well-received.

Weaknesses of Morningstar

• Cost: Morningstar Investor can be expensive, especially for individual or beginner investors. However, depending on the user’s level of investment and their need for in-depth research, the value it provides may justify the cost.
• Focus on Growth Prospects: Some users find that Morningstar places a lot of emphasis on growth prospects over historical performance while assessing investments. This approach may not align with some investors’ preferences or investment strategies.

Is Morningstar Worth It?

Morningstar and especially Morningstar Investor provide great tools for investors of all types. They’re a leading firm for a reason, with countless top banks and investment firms all around the world relying on the information and ratings they provide.

Morningstar Investor is great for anyone looking to have access to market-leading stock market information, research, analysis, and tools. It can allow you to quickly screen and assess stocks and funds, and the Portfolio Manager and Portfolio X-Ray tools help you track and analyze your own holdings.

While Morningstar Investor is probably not a great fit for total beginners and extremely passive or active investors, it should appeal to many investors out there.

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