Rating Investments: Morningstar
The stock market is a risky proposition for most shareholders. Understanding who rates investment firms and the process they use may provide investors with crucial information to enable them to make wiser investment decisions. Morningstar was one of the first rating firms to begin evaluating investments with a focus on mutual funds. Founded in 1984, the firm is based on the belief that shareholders and investment advisors needed specific information in order to determine the stability of mutual funds.
In the years since their founding, Morningstar has become a trusted source of rating information. In fact, in 2011 it is estimated that they serve 7.4 million individual investors, 245,000 financial advisors and 4,200 institutional clients, providing them with vital information.
Morningstar takes into consideration a number of factors for rating mutual funds, stocks, bonds and the overall stock market. In addition, they also evaluate various retirement plans including 529s, 401ks and IRA plans. Regardless of what type of investment is being considered or the level of knowledge, investors, investment advisors and market specialists can each find what they need from Morningstar.
Some of the factors that Morningstar considers is fees, the management team, trading costs and long term performance. Recently, Morningstar announced they will change their rating from a star rating to a letter based rating which will help investors make better decisions.
Morningstar does not accept advertising from any funds that they promote; they are there to assist investors of all sizes from beginners to seasoned investors to help them make better investment decisions.