Morningstar Launches Morningstar Broad Style Indexes, Establishing a More Robust Framework for Style Analysis in U.S. Equity Portfolios

Rhea-AI Summary

Morningstar, Inc. (MORN) has launched the Morningstar® Broad Style Indexes℠, a series of 12 U.S. equity indexes that categorize the market by size and style to enhance investment analysis. This initiative aims to provide investors with better benchmarks and diversify their portfolios, complementing existing offerings like the Morningstar Style Box™. The new indexes cater to a growing market, as traditional U.S. equity strategies managed over $4 trillion by year-end 2020. The indexes will officially track funds by March 19, 2021. More information on these indexes is available here.

Positive

• Launch of Morningstar Broad Style Indexes enhances investment analysis.
• $4 trillion in traditional U.S. equity strategies indicates significant market interest.
• Indexes provide better benchmarks for diversified portfolio construction.

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• None.

CHICAGO, Jan. 27, 2021 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced the launch of the Morningstar® Broad Style Indexes℠, a family of indexes designed to more accurately represent the size and style dimensions of the U.S. equity market. The Morningstar Broad Style Indexes consists of 12 U.S. equity indexes that divide the market by capitalization and investment style.

"With more than 30 years of independent Morningstar research and analysis powering our indexes, the Morningstar Broad Style Indexes further empower investors seeking tools that facilitate diversification and strengthen their portfolios," said Ron Bundy, president of Morningstar Indexes. "While a wide array of factors has emerged over time, size and valuation continue to define managed strategies to a far greater extent than other factors. With the addition of the Broad Style Indexes, we are pleased to expand our index offering to provide investors with a greater range of tools for benchmarking and analysis. The Broad Style Indexes also offer exceptional value, advancing Morningstar's goal of lowering the cost of benchmarking and empowering investor success."

The Morningstar Style Box™, first created in 1992, characterizes investments by their fundamental attributes, dividing the equity market along dimensions of size and valuation. The market for U.S. style-based investment strategies has continued to grow: Traditional mutual funds and exchange-traded funds classified in Morningstar's U.S. Equity Large Cap Growth global fund category held nearly $2.7 trillion in investor capital and assets in U.S. Equity Large Cap Value strategies totaled more than $1.3 trillion, as of year-end 2020, according to Morningstar data.

The Broad Style Indexes family aims to provide investors with a broader set of benchmarks to better reflect the opportunity set in style investing and facilitate portfolio construction with fewer building blocks.

While the underlying data and methodology of the Broad Style Indexes are designed to be consistent with the Morningstar Style Box, the Broad Style Indexes cover larger segments of the market. By allowing for overlap in constituents and extending further down the market-capitalization spectrum, the indexes facilitate better benchmarking of active strategies, making them a natural complement for informing style-related investment decisions.

In December 2020, Morningstar and iShares announced that the nine existing funds in the iShares Morningstar U.S. Equity Style Box ETF suite would begin tracking the new Morningstar Broad Style Indexes, no earlier than March 19, 2021.

The Morningstar Broad Style Indexes are available as of Jan. 27, 2021. Morningstar also launched a guide on the Morningstar Broad Style Indexes, available here.

About the Morningstar Style Box™

The Morningstar Style Box has become the industry standard for categorizing and tracking managed investment portfolios. It describes securities in terms of their relative size and value-growth orientation in an intuitive, visual tool. It is based on a robust methodology that includes forward-looking and historical components and 10 different factors to measure value-growth orientation. Because different investment styles often offer different risk/reward patterns, it is important for individuals to understand the investment style of a stock, fund, or portfolio. This understanding can help investors and advisors construct portfolios that are consistent with the investor's return expectations and risk tolerances. The style box lays the groundwork for better portfolio assembly and monitoring and is a useful tool for individual and professional investors. The Morningstar Style Box will not experience changes as part of the launch of the Morningstar Broad Style Indexes.

About the Morningstar® Broad Style Indexes℠

The Morningstar Broad Style Indexes are designed to provide investors with a more accurate reflection of their opportunity set, enabling intelligent benchmarking and asset allocation decisions. This new approach is built to give investors more flexibility to access the broad market while maintaining their desired style exposure. The Morningstar Broad Style Indexes complement Morningstar's existing style indexes.

Learn more about Morningstar's robust suite of indexes across all asset classes here.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $215 billion in assets under advisement and management as of Sept. 30, 2020. The Company has operations in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed outside the scope of this press release; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

©2021 Morningstar, Inc. All Rights Reserved.

MORN-P

Media Contact
Sarah Wirth, +1 312 244-7358 or sarah.wirth@morningstar.com

 

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SOURCE Morningstar, Inc.

FAQ

What are the Morningstar Broad Style Indexes?

The Morningstar Broad Style Indexes are a family of 12 U.S. equity indexes that categorize the market by size and style to improve investment analysis and benchmarking.

When will the Morningstar Broad Style Indexes take effect?

The Morningstar Broad Style Indexes are available as of January 27, 2021, and will officially track iShares funds starting March 19, 2021.

How much capital do traditional mutual funds in the U.S. equity market hold?

As of year-end 2020, traditional mutual fund strategies classified in Morningstar's U.S. Equity Large Cap Growth category held nearly $2.7 trillion and Large Cap Value strategies held over $1.3 trillion.

What is the goal of the Morningstar Broad Style Indexes?

The goal is to provide investors with broader benchmarks that accurately reflect the opportunity set in style investing, facilitating better asset allocation decisions.

What is the significance of the Morningstar Style Box?

The Morningstar Style Box is an industry standard tool that categorizes and tracks managed investment portfolios based on their size and value-growth orientation.