|Richard J. Milton, CFA|
|MainStreet Advisors is a Chicago-based investment advisory firm serving trust departments at community banks throughout the United States. Founded in 2003, MainStreet has approximately $700 million in assets under advisement. An estimated $125 million of these assets are invested in large-cap companies, one of the areas of equity research that Morningstar provides.|
MainStreet Advisors serves a niche that not many other companies fill—we act as investment officers for bank trust departments. Because of our role, it is important for us to have access to excellent investment research. With all the good research being done on the outside, it did not make sense to re-create these resources internally. So we sought out firms that provide investment research.
As we looked at potential providers, one thing we liked about Morningstar was that we could quantify how well their analysts had done in their stock analysis through reviewing the performance of their Tortoise and Hare portfolios. The performance measurements against the general market are built right into the product—their
|portfolios offer a track record. This is data that other research firms may not provide, so it can be difficult to determine how other firms’ analysts are really performing.|
Valuable analyst access
Because we can talk to Morningstar analysts at any time, we look at Morningstar as an extension of our company. It’s like having 90-plus research analysts sitting right next to me. With each analyst covering just 20 to 25 companies, it allows me to feel confident that these companies are being closely watched. We know the Morningstar analysts are talking to the CEOs, CFOs, and management at the individual companies. As a portfolio manager here, I can’t possibly know what is going on with each individual company as intimately as they do.
|In addition, Morningstar’s independence is very important to us. It allows us to maintain a critical distance from the analyst process. I feel like we can ask the hard questions of the analysts much more easily than if they were within our walls.|