Morningstar OBSR Research Philosophy and Methodology

We believe that in-depth qualitative analysis conducted by a team of analysts who are passionate about their work, and that is tested and informed by quantitative analysis, lies at the heart of successful fund research. Morningstar OBSR helps clients identify appropriate high-quality funds and works tirelessly to do so.

The role of our fund analysts and our fundamental approach to research remain as solid as ever. Our analysts seek to understand fund managers and their funds by focusing on group ownership and stability; resources; investment philosophy and objectives; investment process; portfolio construction and risk controls together with regular reviews. This aligns with Morningstar’s five key pillars: Parent, Process, Performance, People, and Price. The methodologies are effectively the same but described differently.

The Morningstar OBSR Analyst Rating that emerges from our research is based on our analysts’ convictions in a fund’s ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term.

View a detailed description of our fund rating methodology

A Stronger Research Team
The merging of OBSR and Morningstar research teams has allowed us to broaden our capabilities as we draw on Morningstar’s independent perspective and global expertise in analysing investments. Morningstar’s data and technology provides unparalleled support to our analysts, enabling them to play to their own strengths in detailed qualitative research.

Tested Qualitative Research Process
Our research process has been tested by time yet continues to develop to serve a tightening regulatory environment and ever-changing investment world. Our qualitative analysis requires exhaustive research and face-to-face meetings with fund managers and senior personnel within fund groups. During these meetings we work within a framework that always covers key areas leading to our assessments while remaining flexible enough to consider each fund on an individual basis.

Quantitative Support
Quantitative analysis simply supports our understanding and judgment of a fund and does not drive our research process. We analyse published fund performance data and examine portfolios at the stock level. The quantitative research we do often unearths useful information that our analysts address in their regular face-to-face meetings with fund managers.

An Ongoing Process
By undertaking detailed qualitative research informed by quantitative analysis, we are able to identify the funds that are fulfilling their investment objectives. We review funds quarterly to assess whether the investment process remains in line with our understanding or requires a reassessment and possible change to their ratings.