Morningstar moves to new global fund rating scale

Friday 10th June 2011

Morningstar Australasia has announced plans to transition its Morningstar Recommendation rating scale for New Zealand and Australian funds to a new global fund ratings scale applied to funds Morningstar covers worldwide.

"The global reach of our fund manager research capability is one of our core strengths, and something our clients' value highly," said Morningstar Australasia chief executive Anthony Serhan.

"The move to a common rating system will further emphasise the global depth of our fund research, and make it easier for the growing number of our clients who use our research across multiple markets. Importantly, the new rating scale will not change the underlying approach we already have, nor will it have a dramatic impact on the relative rankings of the funds we cover."

The new analyst ratings and reports will continue to be based on analysts' convictions about a fund's ability to outperform its peer group and/or a relevant benchmark on a risk-adjusted basis over the long term.

The new Morningstar Analyst Ratings for funds will be assigned as one of five ratings; AAA, AA, A, Neutral or Negative, and Morningstar analysts’ arrive at a rating through an evaluation of five key pillars the company believes predict the future success of a fund; people, process, parent, performance and price.

"This initiative represents another important step forward in Morningstar's fund research in Australia and New Zealand,” said Morningstar Australasia co-head of fund research Tim Murphy.

"As well as creating a global framework for our local efforts, it will enable us to provide leading-edge analysis of offshore investment strategies available in the Australian and New Zealand markets more quickly and effectively, and fulfill the needs of local financial advisers and investors by providing quick, timely analysis from a globally trusted source."

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