Morningstar, Inc.
TypePublic company
IndustryInvestment research, Investment management
Founded1984 (1984)
FounderJoe Mansueto
Headquarters
Chicago, Illinois
,
U.S.
Key people
Joe Mansueto (Chairman)
Kunal Kapoor (CEO)
RevenueIncrease US$1.870 billion (2022)[1]
Decrease US$167.8 million (2022)[1]
Decrease US$70.5 million (2022)[1]
AUMIncrease US$295 billion (2023)
OwnerJoe Mansueto (39,7%)
Number of employees
9,556 (2021)
SubsidiariesMORNINGSTAR JAPAN K.K. (22,1%)
Websitewww.morningstar.com
Footnotes / references
[2][1]

Morningstar, Inc. is an American financial services firm headquartered in Chicago, Illinois, and was founded by Joe Mansueto in 1984. It provides an array of investment research and investment management services.

With operations in 29 countries, Morningstar's research and recommendations are considered by financial journalists as influential in the asset management industry, and a positive or negative recommendation from Morningstar analysts can drive money into or away from any given fund.[3][4] Through its asset management division, the firm currently manages over US$295 billion as of March 31, 2023.[5]

The firm also provides software and data platforms for investment professionals, including "Morningstar Research Portal", "Morningstar Direct" and "Morningstar Advisor Workstation".

History

Founder Joe Mansueto initially had the idea for Morningstar in 1982 while reviewing mutual fund annual reports he had requested from several prominent fund managers.[6] However, it was only after a year working as a stock analyst for Harris Associates, seeing the fund industry and potential competitors up close, that he was convinced that the opportunity was there.[6][7] Morningstar was subsequently founded in 1984 from his one-bedroom Chicago apartment with an initial investment of US$80,000.[8] The name Morningstar is taken from the last sentence in Walden, a book by Henry David Thoreau; "the sun is but a morning star".[8][9]

In July 1999, Morningstar accepted an investment of US$91 million from SoftBank in return for a 20 percent stake in the company. The two companies had formed a joint venture in Japan the previous year.[9][10]

Morningstar's initial public offering occurred on May 3, 2005, with 7,612,500 shares at $18.50 each.[11] The manner in which Morningstar went public is notable. They elected to follow Google's footsteps and use the OpenIPO method rather than the traditional method. This allowed individual investors to bid on the price of the stock, and allowed all investors equal access.

In 2006, Morningstar acquired Ibbotson Associates, Inc., an investment research firm.[12] In 2007, Morningstar acquired the mutual fund data business of S&P Global.[13]

In 2010, Morningstar acquired credit rating agency Realpoint and begins offering structured credit ratings and research to institutional investors for $ 52 million.[14] In the same year, Morningstar acquired Old Broad Street Research Ltd. (OBSR), a UK-based provider of fund research, ratings and investment advisory services, for $18.3 million. After the acquisition, renamed as Morningstar OBSR.[15]

In 2014, Morningstar acquired ByAllAccounts, Inc., a provider of innovative data aggregation technology for financial applications.[16]

In 2016, Morningstar acquires remaining ownership of PitchBook Data for approximately $225 million.[17] In September 2016, Morningstar announced that it had appointed Kunal Kapoor as chief executive officer, effective January 2017, with Mansueto becoming executive chairman at the same time.[18][19]

In 2019, Morningstar to acquire the world's fourth largest credit rating agency DBRS for $669 million. After the acquisition, DBRS merged with Morningstar’s credit rating business[20]。

In 2020, Morningstar entered into an agreement to acquire Sustainalytics, a research and ratings firm specializing in environmental, social and governance (ESG) insights.[21] That same year, Morningstar agreed to acquire PlanPlus Global, a Canada-based financial planning and risk assessment software company.[22]

Issues driving Morningstar / Sustainalytics ESG Risk Ratings[23]
Category Issue Contribution to
ESG Risk Rating
Environmental
43.3%		 Carbon - Own Operations 19.2%
Resource Use 10.3%
Emissions, Effluents and Waste 7.1%
Environmental and Social Impact
of Products and Services		 6.7%
Social
34.1%		 Human Rights 22.8%
Occupational Health and Safety 7.5%
Community Relations 3.8%
Governance
22.6%		 Corporate Governance 11.9%
Business Ethics 6.7%
Human Capital 4.0%

In 2021, Morningstar announced it would acquire the UK and international (including Jersey, Hong Kong and Dubai) operations of the Australian wealth management platform Praemium (ASX: PPS) for £35 million.[24]

In 2022, Morningstar announced that it will acquire the S&P Global-owned Leveraged Commentary & Data (LCD), a company specializing in leveraged loan market data, for $600 million up to $650 million.[25]

Products and services

Morningstar offers a wide array of products and services to both retail and institutional investors.

Morningstar Investment Management

Through its investment management subsidiary, Morningstar currently has over US$265 billion in assets under advisement and management.[5]

Morningstar Direct

Morningstar Direct is a software platform that provides data and analytics to help professional investment managers craft new products and portfolios.

Morningstar Office Cloud

Morningstar offers a single end-to-end cloud-based platform for investment advisors, known as Morningstar Office Cloud. The software allows financial advisors to manage their practice, gain access to data and research, analyze investments, and connect with investors.[26]

Morningstar Premium

The firm offers retail and individual investors with access to news, research, and stock, bond, and mutual fund analysis through its 'Morningstar Premium' subscription product.[27]

Credit Ratings (NRSRO)

In 2010, Morningstar acquired Realpoint, LLC, a former division of private-equity giant Capmark Finance and a nationally recognized statistical rating organization (NRSRO).[28] The firm was rebranded as Morningstar Credit Ratings and competes with S&P, Moody's Investors Service, Fitch Ratings and similar Wall Street firms to provide research and ratings of structured debt products, including mortgage-backed securities and asset-backed securities.[29] Today, Morningstar Credit Ratings issues credit ratings on both structured financial products (CMBS, RMBS, CLOs) and corporate/financial institutions.[30]

On May 29, 2019, Morningstar publicly announced its intention to significantly expand the breadth and scope of its ratings business through a $669 million acquisition of DBRS.[31]

Morningstar Research Portal

In 2022, Morningstar launched its newest research platform aimed at helping financial advisors utilize Morningstar's investment research and other tools to identify and select investments, monitor investment performance, and inform how they communicate with clients.

Influence and criticisms

Morningstar is considered powerful in the investment management industry, and the firm's ratings and recommendations often influence a fund's assets under management. The firm's "star" ratings are often used by fund managers in marketing materials, and positive star ratings bring a credibility to a fund's strategy. Morningstar's analysts and data are frequently quoted in outlets such as the New York Times, Wall Street Journal, and Financial Times.

In October 2017, the Wall Street Journal published a front-page feature story criticizing Morningstar's influence and questioned the predictive power of the firm's rating system.[32] In response, Morningstar provided a quantitative analysis showing that higher-rated funds outperform lower-rated funds, but cautioned against using the ratings as a definitive marker of future performance.[33][34]

Corporate identity

Morningstar's current logo was designed by graphic designer Paul Rand.[35] The design features the "o" in Morningstar appearing as a rising sun, which is a nod to a Henry David Thoreau quote that inspired the company's name.[8] Mansueto considers the logo "one of our most valuable assets".[35]

Major offices

The firm is headquartered in Chicago, Illinois, with major regional offices in New York City, London, Paris, Sydney, Hong Kong, Shenzhen and other cities around the world.

See also

References

  1. 1 2 3 4 "Morningstar 2022 Annual Report" (PDF). Morningstar. 31 December 2022. Retrieved 18 November 2023.
  2. ↑ "Morningstar Press Release" (PDF). Retrieved March 18, 2022.
  3. ↑ "Dentons UKMEA LLP". Financial Times.
  4. ↑ Del Guercio, Diane; Tkac, Paula (February 1, 2001). "Star Power: The Effect of Morningstar Ratings on Mutual Fund Flow". Journal of Financial and Quantitative Analysis. 37. doi:10.2139/ssrn.286157. hdl:10419/100799. S2CID 7601862 – via ResearchGate.
  5. 1 2 "Morningstar Latest Quarterly Results: Q1 2022". 27 April 2022.
  6. 1 2 "Everything I Know, I Learned from Warren Buffett, Corporate Culture Article – Inc. Article". Retrieved May 3, 2007.
  7. ↑ "Joe Mansueto and Bill Nygren: The Importance of Having Conviction". Retrieved May 3, 2007.
  8. 1 2 3 Fetterman, Mindy (November 14, 2005). "USATODAY.com – Can he turn magazine bust into a boom?". USA Today. Retrieved May 3, 2007.
  9. 1 2 "A star is reborn after shake-up". USA Today. February 12, 2001. Retrieved May 21, 2007.
  10. ↑ "Company News; Softbank says it will invest $91 million in Morningstar". The New York Times. July 9, 1999. Retrieved May 3, 2007.
  11. ↑ "Morningstar Press Release". Retrieved May 3, 2007.
  12. ↑ "Morningstar, Inc. to Acquire Ibbotson Associates - Combines Ibbotson's Expertise in Asset Allocation and Morningstar's Expertise in Security Selection and Investment Research". Morningstar. December 12, 2005.
  13. ↑ "Morninstar Acquires S&P Mutual Fund Database". Integrity Research Associates. 27 February 2007. Archived from the original on 2020-02-18. Retrieved February 27, 2007.
  14. ↑ Solsman, Anusha Shrivastava And Joan E. (March 19, 2010). "Morningstar to Buy Credit Rater Realpoint". Wall Street Journal. Archived from the original on 2021-02-06. Retrieved 2021-02-25 – via www.wsj.com.
  15. ↑ "Morningstar UK Ltd. Acquires London-based Old Broad Street Research Ltd. (OBSR), Premier Provider of Fund Research, Ratings, and Investment Consulting Services in the United Kingdom". April 12, 2010.
  16. ↑ Cohen, Margaret Kirch. "Morningstar, Inc. Acquires ByAllAccounts, Inc., Provider of Innovative Data Aggregation Technology for Financial Applications". CISION (Press release).
  17. ↑ Lerman, Rachel (14 October 2016). "Morningstar buys Seattle startup PitchBook in $225 million deal". Seattle Times. Archived from the original on 2017-06-20. Retrieved 2021-03-06.
  18. ↑ "Morningstar U.S. | News Archive". Retrieved February 2, 2017.
  19. ↑ Yerak, Becky (6 September 2016). "Kapoor to replace billionaire founder Mansueto as Morningstar CEO". Chicago Tribune.
  20. ↑ Banerji, Gunjan (29 May 2019). "Morningstar Looks to Expand Ratings Business With DBRS Deal". Wall Street Journal. Archived from the original on 2021-01-27. Retrieved 2021-02-25.
  21. ↑ "Morningstar to Acquire Sustainalytics and Expand Access to ESG Research, Data, and Analytics for Investors Worldwide". Archived from the original on 2020-12-02. Retrieved 2021-02-27.
  22. ↑ "Morningstar (MORN.US) to acquire financial planning and risk assessment software company PlanPlus Global".
  23. ↑ Morningstar, Inc. (2023) "Sustainalytics ESG Risk Rating Summary Report" for Holcim Ltd., page 3.
  24. ↑ "Morningstar to Buy Praemium's UK, International Business for GBP35M". 尊嘉金融. marketwatch. Archived from the original on 2022-02-13. Retrieved December 21, 2021.
  25. ↑ Gottlich, Max (4 April 2022). "Morningstar plans to buy Leveraged Commentary & Data for up to $650M". Seeking Alpha.
  26. ↑ "Morningstar Announces Morningstar Office Cloud, an End-to-End Practice and Portfolio Management Platform for Independent Advisors" (Press release). November 16, 2017.
  27. ↑ "Premium Membership | Morningstar". www.morningstar.com.
  28. ↑ Solsman, Anusha Shrivastava And Joan E. (March 19, 2010). "Morningstar to Buy Credit Rater Realpoint". Wall Street Journal – via www.wsj.com.
  29. ↑ "Morningstar Acquires MBS Rater Realpoint". Financial Planning. May 5, 2010.
  30. ↑ Beals, Rachel Koning. "The ratings 'Big 3' becomes 4? Morningstar approved to rate corporate bonds". MarketWatch.
  31. ↑ Banerji, Gunjan (29 May 2019). "Morningstar Looks to Expand Ratings Business With DBRS Deal". Wall Street Journal.
  32. ↑ Krouse, Kirsten Grind, Tom McGinty and Sarah. "The Morningstar Mirage". WSJ.{{cite web}}: CS1 maint: multiple names: authors list (link)
  33. ↑ Huebscher, Robert (October 29, 2017). "Morningstar Versus The Wall Street Journal: Who Won?". Advisor Perspectives.
  34. ↑ "A Message From the CEO | Morningstar". www.morningstar.com.
  35. 1 2 "Corporate Design Foundation – @issue journal". Retrieved May 21, 2007.
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