Morningstar recently announced changes to its Morningstar Analyst Ratings system, now applying this forward-looking rating to ETFs. In addition, ETFs will now be combined into the same relevant peer group alongside mutual funds for the traditional Morningstar one to five-star rating calculated quantitatively using backward-looking performance and risk data. 

The goal is to aid investors by facilitating the comparison of mutual funds and ETFs side by side.

What are Morningstar ratings?

Per Morningstar, “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.”

Sounds good, but when?

Morningstar didn’t supply specific timing on when these changes will be implemented but is hosting a webinar on Wednesday, September 21st at 1 pm CT/2 pm ET. Please click here for more information.

At SunStar, we believe efforts to inform, educate and offer greater transparency are good for investors and the investment community. We look forward to learning more.

Read the complete press release here.