Morningstar Category

Morningstar are a large US based investment data provider; RL360 use their data and tools in our online interactive fund centres and for the analysis of funds in our fund ranges.

There are a variety of different ways of grouping assets so that they can be compared in a meaningful way; you may encounter groupings by region, sector or currency, for example. Morningstar provide their own Morningstar Category to help investors and financial professionals make decisions across well-defined groupings of funds based on their underlying holdings over the previous three years.

Examples of Morningstar Categories are ‘Japan Large-Cap Equity’, ‘Global Flexible Bond’ or ‘Sector Equity Healthcare’.

These groupings make it easier to identify similar funds which invest in similar assets, such as ‘Japan Large-Cap Equity’ which groups funds which invest in equity in companies based in Japan that have a large market capitalisation.

You may also see the Morningstar category average used as a benchmark for performance. This metric represents the average returns or volatility over a period over the whole category; if a fund has seen results higher than the category average then it has provided returns in the top half of the category.

The Morningstar Category is also often used for quartile rankings, which splits the overall returns of the category over a period into four quarters and ranks a fund in one of these ‘quartiles’. A first quartile fund has shown returns for the period in the top 25% of similar grouped funds.

Past performance may not be repeated and should not be used as a guide to future performance.