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| | | | Morningstar Methodology | | | Based on years of holdings information in Morningstar’s database, Manager Benchmarks provide institutional investors and investment consultants with ready-to-use peer group data. The benchmarks organize the managed investment universe in groups that complement the way institutional investors view funds. Yet they’re objectively defined and constructed by Morningstar. All data is survivorship-bias-free, presenting a more realistic view of performance over historical time periods. Investment professionals can use either asset-weighted or equal-weighted data in their analyses. | | |
| | | Categorization: More specific manager groupings | | |
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| | | Morningstar’s Manager Benchmarks are based on a “tagging” system that captures each fund’s unique combination of attributes. These attributes include investment characteristics (style, capitalization, sector exposure, duration, and credit quality), operational characteristics (country of registry, legal structure, and assets), and sales characteristics (share class, distribution channel, and availability). Using these tags, we bundle managers into relevant groupings and create time series data for several dimensions—daily performance, operations data, select portfolio data, and net cash flow information. Institutional investors and consultants can access this data through the Institutional Categories Series of Morningstar’s Manager Benchmarks. | | | | | Source: Objective measures | | |
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| | | Morningstar’s Manager Benchmarks provide a point of reference that is an appropriate measure of performance drawn from our extensive investment database. Well-known throughout the industry for its independence, Morningstar data brings credibility to presentations to fund boards and institutional investors. | | | | | Historical performance: Survivorship-bias-free benchmarks | | |
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| | | The time series data calculated in Morningstar’s Manager Benchmarks comes from historical data dating back to a fund’s inception. Funds that have been liquidated or merged are included in analysis for the periods where they met the specific criteria in question. This presents a more accurate assessment of performance within categories, as it includes more than just the most successful funds. | | | | | Data types: Asset-weighted and equal-weighted | | |
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| | | Institutional investors and consultants who use Morningstar’s Manager Benchmarks have a choice of asset-weighted or equal-weighted data. Asset weighting gives those funds with the largest assets the heaviest weights. Because large funds have achieved economies of scale, their operations data is more stable, which results in smoother time series data. Equal weighting gives each fund in the data set the same weight, regardless of assets. Generally preferred by most researchers, equal weighting generates a more comprehensive data snapshot. Yet its outliers can sometimes skew averages, resulting in a less even time series of data. |
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