Julie Jason: Morningstar an investor resource.
Morningstar CEO Kunal Kapoor’s opening remarks at the Morningstar Investment Conference in Chicago set the stage: Morningstar, he said, is focused on a single mission: “empowering investor success.” As a conference attendee (something I try to do yearly in connection with this column), that mission has meaning. I can relate to it in my role as a proponent of financial literacy education. What can be better than to be able to help one build knowledge and skills, and in turn enhance sound decision-making?
That’s something Morningstar does directly with 10 million individuals through a number of research offerings, including Morningstar.com and print publications such as Morningstar FundInvestor.
Some offerings are free (morningstar.com), and others are paid subscription services. Both are worth exploring if you want to enhance your investment knowledge and skill.
Let’s say you are an individual investor who owns some mutual funds in a taxable account or a taxdeferred IRA or 401(k), or a tax-free Roth. How could you use services like Morningstar or Steele Mutual Fund Expert (mutualfundexpert.com)?
The best way to start to assess a holding you currently own is to compare the fund with its peers. In Morningstar and Steele terms, that’s the fund’s “category.” For example, a large capitalization fund might be a blend or a growth or a value fund. A bond fund might be a short-term municipal fund or a high-yield corporate bond fund.
Let’s look at a few examples. Say your large blend fund returned 8 percent in 2014. Without context, you won’t know how to judge that return. One way is to look at the other large blend funds. That year, returns ranged from 20 percent to -3 percent. The highest fund was 1 in category rank, and the bottom fund had a 99 category rank.
What you don’t want to see is volatility in fund category rank: One year the fund ranks 1, and the next year it ranks 99. Are there such funds? Yes indeed. (If you are an interested and engaged researcher, write to me for a few examples. Put “Category Ranks” in the subject of your email to readers@juliejason.com, and tell me something about yourself that I can share in this column, identifying you with your initials.)
Let me give you another example. Assume you own an intermediate-term bond fund that I will call “BF.” If the fund performed in the top quartile in its category every year for the past 10 years, that tells you something quite positive. For example, BF ranked in the top quartile in 15 out of 20 years, and in the top decile 13 of 20 years.
Getting back to the Morningstar.com website, pay a visit and look around. You’ll find news and valuable commentary (for example, how to make the most of your 401(k)), and free investing tools, such as risk and return data, expense ratios, performance and capital gains exposure — all worth exploring.
When I tried to access the free website, I registered but did not sign up for a free trial of “Premium.” In order to access the free website, I had to “X” out of the Premium popup. By registering, you gain access to Morningstar commentary, investment screeners and other useful tools.
Morningstar also offers products for advisers, and relatively recently started offering its own investment products. Founded in 1984, the company went public in 2005. (Disclosure: I do not own the stock.) I subscribe to a few of Morningstar’s offerings, as well as Steele Mutual Fund Expert. Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford) and author, welcomes your questions/comments (readers@juliejason.com). Her awards include the 2018 Clarion Award, symbolizing excellence in clear, concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award-Winning Financial Columnist.” To hear Julie speak, visit juliejason.com/events.