Morningstar Review 2023: Key Features, Tools, PROs and CONs

In this Morningstar Review, we will help you decide if their premium investment research and portfolio tools are worth the cost.

Quick Summary:

Morningstar is a leading provider of independent investment research. Their primary function is to compile and analyze financial data to provide investors with detailed reports and ratings on stocks, mutual funds, bonds, and other investment offerings. It also offers portfolio management tools, investment analysis software, and educational resources like its Morningstar investing classroom.

Overall Rating:

Stock Analysis:

Tools & Features:

Ease of Use:

Price:

PROS

• Powerful Analytical Tools
• 7 Day Free Trial

CONS

• Limited coverage of small caps
• Amount of data can be overwhelming

Morningstar is a leading provider of investment research, data, and analysis that caters to the needs of individual and professional investors.

In this Morningstar review, we will analyze Morningstar’s offerings, highlighting its key features and the value it brings to the investing community.

Morningstar Investor: At a Glance

• Price: $34.95/mo or $249 a year (41% off monthly cost)
• Investments Analyzed: Over 2,000 Mutual Funds, Stocks, and ETFs
• Star Rating System:
• Portfolio Screener: nvestors can refine their searches by asset class, investment style, performance metrics, expense ratios, and more.
• Portfolio X-Ray: It covers asset allocation, sector weightings, geographical distribution, stock overlap, to name a few.
• Analyst Reports: The analyses are detailed, grounded in a solid understanding of market dynamics and the company’s financial health. They examine the management’s competency, a company’s competitive advantage (the “economic moat”), fair value estimates, growth prospects and more.

What is Morningstar?

Morningstar is a renowned financial services firm that provides investment research, data, analysis, and tools to individual investors and financial professionals. Among investors, Morningstar is considered one of the top investment newsletters.

It offers various services, including mutual fund and stock research, portfolio management tools, investment analysis software, and educational resources like its Morningstar investing classroom.

Morningstar is well-known for its independent and objective approach to providing information, empowering individuals and institutions to make informed investment decisions.

How Does Morningstar Work?

Morningstar is a leading provider of independent investment research. Their primary function is to compile and analyze financial data to provide investors with detailed reports and ratings on stocks, mutual funds, bonds, and other investment offerings.

Their research into investment picks is based on a deep understanding of the fundamentals of each investment. They examine factors like the financial health of a company, the strength and strategy of its management, and its competitive advantage, which Morningstar refers to as an “economic moat.”

Morningstar uses a star rating system for its fund analysis, colloquially known as Morningstar Ratings. One star is the lowest rating, and five stars is the highest.

These ratings serve as a quick, easy-to-understand indicator of Morningstar’s assessment of the particular investment back’s risk-adjusted performance relative to its peers.

In addition to their investment research, Morningstar provides various tools and software for investors. Notably, the Morningstar Portfolio X-Ray is a tool that gives investors a comprehensive view of their portfolio’s asset allocation, sector weightings, stock holdings, and more. This tool can help identify areas of risk and opportunity, aiding investors in making more informed investment decisions.

While some basic services are free, Morningstar also offers a premium service that provides access to more in-depth research and tools.

Who Should Use Morningstar?

Key Features

As an individual investor, I appreciate the wealth of resources available through their platform. Their star-rating system provides a user-friendly and intuitive way to assess investment opportunities at a glance, making it an excellent tool for both beginner and experienced investors.

Analyst Reports

One of the key strengths of Morningstar is its commitment to providing independent and unbiased research. The company’s analysts conduct in-depth research and analysis, offering insights into investment strategies, market trends, and individual securities.

What I particularly appreciate about Morningstar’s ratings is its commitment to impartiality and its emphasis on long-term investment strategies.

In addition to the analyst report, you can view key metrics such as:

• Quote: Contains bid/size, ask/size, day range, volume / avg, year range, forward div yield, market cap, investment style, price/sales, beta, (5-year), consensus forward P/E, price/book, a snapshot of Morningstar analysis, analyst note, view report archive, company profile.
• Price vs Fair Value: contains price vs fair value chart.
• Trailing Returns: contains trailing returns chart (daily, monthly, quarterly).
• Financials: contains valuation, growth (3-year annualized), financial health, profitability, income statement, balance sheet, cash flow.
• Valuation: contains valuation chart.
• Operating Performance: contains fiscal chart, financial leverage chart.
• Dividends: contains dividends & splits chart, ex-dividend date, payable date, divided type, amount, dividend yield (TTM), dividend reinvestment plan.
• Ownership: contains ownership data for funds and institutions.
• Executive: contains key executives, board of directors, committees, transaction history.

The analyses are detailed, grounded in a solid understanding of market dynamics and the company’s financial health. They examine the management’s competency, a company’s competitive advantage (the “economic moat”), fair value estimates, growth prospects and more. This thorough approach makes Morningstar a highly reliable source for investment advice.

Portfolio Manager

Morningstar Portfolio Manager is a dynamic tool designed to empower investors to monitor and manage their investments efficiently.

The Portfolio Manager offers a comprehensive view of your investments, including stocks, bonds, mutual funds, and ETFs.

By consolidating all your investments into one location, it makes it simple to see a complete picture of your financial status. This holistic view is useful, especially for investors with multiple accounts or diversified portfolios.

One of the standout features of the tool is its ability to track the performance of your investments over time. It shows both the total return and the personalized return, which considers the timing of your purchases and sales, providing a more accurate reflection of your actual investment performance.

Portfolio X-Ray

Track your Investment Portfolio, evaluate your strategy, and create potential watchlists.

• Asset Allocation: Understand how your holdings are diversified across asset classes.
• Stock Sector: See where you’re over- and under concentrated across twelve sectors.
• Fees & Expenses: Compare your expense ratio to similarly weighted hypothetical portfolios.
• Stock Stats: Assigns important ratios to your portfolio holdings, including P/E, P/B, ROA, and more.
• Stock Style Diversification: See your portfolio diversification across Morningstar’s Style Box.
• Stock Type: Our unique classifications, ranging from high yield to speculative growth, help you better understand if holdings match your investment style.
• World Regions: Global breakdown of your holdings.

Morningstar’s Portfolio X-Ray is a powerful tool that provides investors with an in-depth analysis of their portfolio’s composition and performance. This tool can be helpful in identifying the strengths and weaknesses of individual stocks.

The strength of Portfolio X-Ray lies in its ability to dissect a portfolio and present a granular view of its components. It presents data in a structured manner, revealing aspects of your portfolio that may not be apparent at a surface level. It covers asset allocation, sector weightings, geographical distribution, stock overlap, and more.

The “Stock Intersection” feature is particularly insightful. It helps identify individual stock exposure across different funds, an often overlooked yet critical aspect of portfolio diversification. By highlighting the overlap, it becomes easier to avoid overexposure to certain stocks across similar funds, thereby reducing risk.

The “World Regions” view is another powerful feature that helps maintain a balanced international exposure. It can be a game-changer for investors who aim for a globally diversified portfolio.

What impresses me about Portfolio X-Ray is its commitment to transparency. It doesn’t merely present the numbers but also provides valuable insights into what they mean.

However, using Portfolio X-Ray does have a learning curve. The vast amount of information can be overwhelming for beginner investors. It requires a basic understanding of financial terms and investment strategies to take full advantage of the tool. Additionally, the tool is part of Morningstar’s premium service, which might not appeal to those with a tight budget.

Portfolio Screener

Morningstar Portfolio Screener is a robust tool provided by Morningstar that allows investors to screen and filter investment options based on their specific criteria.

With the premium fund screener and customizable filters, investors can refine their searches by asset class, investment style, performance metrics, expense ratios, and more. The Portfolio Screener boasts an extensive database of fund managers covering a wide range of investment vehicles, including mutual funds, ETFs, stocks, and bonds, ensuring investors have access to diverse options.

By applying quantitative and qualitative screening criteria, investors can narrow their choices to investments that meet their specific requirements.

The screener provides advanced metrics and analytics, enabling users to evaluate and compare investments effectively. These metrics encompass various performance measures such as returns, standard deviation, Sharpe ratio, alpha, and more.

With these tools, investors can assess investment performance, risk profiles, and other relevant factors, aiding them in making informed decisions.

The Portfolio Screener allows users to save and track their favorite investment options by creating personalized watchlists. This feature enables investors to monitor the performance and changes of selected investments over time, facilitating ongoing research and analysis. Furthermore, the tool offers the functionality to export filtered results and generate comprehensive reports, enabling users to document their research findings or share them with advisors or colleagues.

Morningstar Investor Pricing

Morningstar offers premium subscription services that provide access to more detailed research, advanced analytics, and additional tools. Morningstar’s premium features come at a cost.

While the quality of the analysis and the depth of information provided justify the price for serious investors, casual investors or those with a tight budget may find the cost prohibitive.

Morningstar Investor Subscription Price:

7-day free trial

• $34.95/month

• $249/year: Save over 41% compared a monthly subscription

PROs and CONs Explained

PROS of Morningstar

• Comprehensive Investment Research: Morningstar offers a vast amount of investment research, data, and analysis across various asset classes. It provides investors with a wealth of information to make informed investment decisions.
• Independent and Objective Analysis: Morningstar is known for its independent and objective approach to investment research. Its analysts provide unbiased evaluations, ratings, and insights, helping investors gain a balanced perspective on investment options.
• Powerful Analytical Tools: Morningstar offers a range of analytical tools, such as the Morningstar Rating and Morningstar Style Box, which enable investors to assess investments based on performance, risk, and style. These tools aid in identifying investments that align with individual preferences and objectives.
• Portfolio Management Solutions: Morningstar provides portfolio management tools that allow investors to track, analyze, and optimize their portfolios. These tools provide insights into portfolio performance, asset allocation, and risk, aiding investors in managing their investments effectively.
• Investor education resources: Morningstar’s educational resources, including articles, videos, and webinars, contribute to investor education and financial literacy. These resources empower individuals to enhance their knowledge and make more informed investment decisions.

CONS of Morningstar

• Limited Coverage Small Cap Investments: Morningstar’s coverage may be more extensive for mainstream investment options, such as large-cap stocks and popular mutual funds. However, its coverage of smaller or niche investments may be relatively limited, potentially restricting the availability of comprehensive research on such assets.
• Potential Information Overload: With a vast amount of data and research available, investors may face the challenge of information overload. Navigating through the various reports, metrics, and analysis provided by Morningstar requires careful attention and the ability to filter out relevant information.
• Subjectivity in Ratings: While Morningstar strives for objectivity in its ratings and evaluations, there is an inherent subjective component involved. Different analysts may interpret data and assign ratings differently, which can lead to variations in assessments of the same investment.

It’s important to consider these pros and cons of Morningstar, keeping in mind individual investment needs, preferences, and the availability of alternative research and analysis platforms.

Best Alternatives

While Morningstar is a prominent provider of investment research and fundamental analysis, there are several alternative platforms that offer similar features.

Here are some notable alternatives to Morningstar:

Action Alerts PLUS

Action Alerts PLUS is a subscription-based stock-picking service offered by TheStreet.com. This service was founded by financial analyst and commentator Jim Cramer, known for his work on CNBC’s “Mad Money,” along with a team of research analysts.

or read our complete Action Alerts Plus Review

Zacks Investment Research

Zacks Investment Research offers research reports, investment tools, and screening capabilities. It provides a detailed analysis of equity research, stock, and earnings estimates to assist investors in their decision-making process.

Motley Fool

The Motley Fool is a comprehensive financial services company offering a range of resources, including investment advisory services, educational content, and community support for investors of all skill levels. With its focus on long-term growth through well-researched stock picks and a wealth of financial knowledge, it empowers individuals to take control of their financial future and navigate the investing world with confidence.

Read our complete Motley Fool Review

The Bottom Line

Morningstar has established itself as a go-to platform for investors seeking comprehensive and reliable investment research and analysis.

With its vast database, analytical tools, independent research, investor education resources, and portfolio management tools, Morningstar empowers individuals to make more informed investment decisions.

Whether you are a seasoned investor or just starting your investment journey, Morningstar’s offerings provide valuable insights and support to help you navigate the complex world of investing successfully.