Morningstar category assignment

Neither subscribers, nor Fi360, can change the assignment of Peer Groups for investments within the Fi360 Toolkit.

Morningstar assigns categories to all types of portfolios, such as mutual funds, variable annuities, and separate accounts. Portfolios are placed in a given category based on their average holdings statistics over the past three years. Morningstar’s editorial team also reviews and approves all category assignments. If the portfolio is new and has no history, Morningstar estimates where it will fall before giving it a more permanent category assignment. When necessary, Morningstar may change a category assignment based on recent changes to the portfolio.

The driving principles behind the classification system are as follows:

  • Individual portfolios within a category invest in similar types of securities and therefore share the same risk factors (for example, style risk, prepayment risk).
  • Individual portfolios within a category can, in general, be expected to behave more similarly to one another than to portfolios outside the category.
  • The aggregate performance of different categories differs materially over time.
  • Categories have enough constituents to form the basis for reasonable peer group comparisons.
  • The distinctions between categories are meaningful to investors and assist in their pursuit of investing goals.

The Morningstar Category Classifications

 

(Explanation provided by Morningstar - subject to change)

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