What are Morningstar’s investing principles?

Successful investing is incredibly tough. Morningstar’s investment approach is bold, effective and trusted by millions of investors with over $260bn in assets under advisement and management worldwide as of 31 December 2016.

Our unique and powerful guiding principles drive every investment decision we make:

  • We put investors first
    • Firms that put investors first win in the long term because their investors win. Putting investors’ interests above all else is the foundation of Morningstar. We align our interests with investors, and remain committed to helping them achieve better outcomes.
  • We’re independent-minded
    • To deliver results it’s necessary to invest with conviction, even when it means standing apart from the crowd. Our research shows that making decisions based on fundamental analysis, rather than short-term factors helps deliver better long-term investment results. We’re not afraid to take a contrarian view when our research supports it.
  • We invest for the long term
    • Taking a patient, long-term view helps us ride out the market’s ups and downs and take advantage of opportunities when they arise. While returns may fluctuate widely from year to year, holding assets for longer periods of time helps reduce risk significantly.
  • We’re valuation-driven investors
    • Anchoring decisions to an investment’s fair value–or what it’s worth–leads to greater potential for returns. Our valuation-driven approach is designed to help investors get more than what they’re paying for. In selecting an investment, we seek to apply a ‘margin of safety’–knowing what we think an investment is worth and getting it for a discounted price.
  • We take a fundamental approach
    • Powerful research is behind each view we hold, and we understand what drives every investment we make. It’s important to understand the fundamental drivers of all investments owned. An investment’s price may tell you little about its fair value. Instead, we focus on research into the cash flows and other potential benefits of ownership to drive investment decisions.
  • We strive to minimise costs
    • Controlling costs helps investors build wealth by keeping more of what they earn. Investment returns are uncertain, but costs are not. Lower costs allow investors to keep more of their returns. Fees, transaction costs and taxes reduce the compounding benefits of investing, and it’s important to minimise them whenever possible.
  • We build portfolios holistically
    • To help manage risk and deliver better returns, truly diversified portfolios combine investments with different underlying drivers. Portfolios should be more than the sum of their parts. True diversification can have a powerful impact on a portfolio’s risk-adjusted returns–but simply holding more investments isn’t the same as true diversification. That’s why we recognise the importance of taking a holistic approach to building portfolios. We look at the fundamentals of each underlying investment to determine what’s driving their cash flows and to assess how each might interact under varying market conditions.


This smarter approach has helped each of Morningstar Next’s portfolios outperform their return targets since inception. Remember though, that past performance isn’t a reliable indicator of future performance.

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