If you've been investing for any length of time, you've probably heard of Morningstar. The company is famous for providing ratings on mutual funds, that are widely respected and heavily relied on throughout the industry. But now with Morningstar Premium, you'll be able to take advantage of the insights and analyses the company provides to help you improve your investment performance.
The next question you might ask: “Is Morningstar Premium worth it?”
What is Morningstar?
Based in Chicago, and founded in 1984, Morningstar is an investment research firm. It’s considered to be one of the most influential in the industry. The company provides ratings and other information, as well as tools, to help investors make more informed investment decisions. As an asset management company, it has more than $220 billion in assets under management.
It rates mutual funds using 1-5 stars, with a five-star rating as the highest. The ratings are consistent with the returns offered by funds in each star class.
Morningstar Premium, which is the product we'll be reviewing, provides individual investors with access to news, analysis, and research of stocks, bonds, exchange-traded funds (ETFs) and mutual funds.
How Morningstar Premium Works
Morningstar provides analysis and ratings of individual securities like stocks, bonds, and ETFs; but its main focus is mutual funds. The service will mainly benefit long-term, buy-and-hold investors, whose investing activities will be best served with mutual funds.
Morningstar Premium is a subscription service that will give investors access to detailed information on the various investment types. Of course, it will also provide ratings on mutual funds to help you select the ones that will work best in your portfolio.
The service comes with screening tools that will help you narrow down which funds you want to invest in from the many thousands that are now available. Services are available for both free and premium accounts.
Morningstar Premium Tools and Features
The service provides tools and worksheets to help you prepare for investing. Examples include a budget worksheet, goal planning worksheet, net worth worksheet, and personal cash flow statement. It's clear Morningstar focuses on your big-picture financial situation.
They also offer what they call “Morningstar Investing Classroom,” a self-study course, that teaches you about: stocks, mutual funds, ETFs, bonds, and even proper portfolio construction. You'll also have help to familiarize yourself with the hundreds of investing terms through the “Investment Glossary.”
This tool evaluates your asset allocation as well as sector weightings. It looks to reveal concentrated positions as well as the stock holdings in your mutual funds. This will help you to avoid duplication of the same companies in your portfolio.
Morningstar Premium offers various planning tools. It includes tax planning, personal finance, saving for college and retirement, as well as investing for retirement. Most of these planning tools involve a series of articles related to the particular planning activity.
Morningstar offers its “Basic Fund Screener.” It's a tool that enables you to search and filter mutual funds by category, ratings, or performance. You can use the screener to find the best funds to fit within your chosen investment criteria.
The “Premium Fund Screener” enables you to search and filter mutual funds by category, analyst grade ratings, or performance. Specific criteria include Morningstar rating and risk, sustainability, annual returns, trailing returns, load adjusted returns, tax cost ratio, yield, and a host of other criteria. (This tool is not available on the free version.)
Another valuable tool is the “Similar Funds” feature. It will provide you with a list of funds similar to the ones you isolate through the fund screeners, giving you a greater choice of funds.
There are also screeners available for stocks and ETFs.
If you're struggling with selecting the best funds for your portfolio, this feature provides what Morningstar determines to be the best investment ideas compiled from 220 independent analysts. Categories include five-star stocks, ETFs, funds, high-yield bonds, core bond funds, foreign bond funds, US index funds, foreign index funds, bond index funds, “inflation fighters”, target-date funds, and starter funds.
This is one of the more valuable tools offered by the platform. It enables you to track your investments, evaluate your strategy, and create watch lists of potential opportunities.
Personal Capital Tie-in
When you first sign up for the service, you'll have the option to have a one-on-one financial review with a licensed advisor through Personal Capital. This requires a minimum investment portfolio of $100,000. Along with a review, you'll also be provided with free Personal Capital tools to help you manage your investments.
Morningstar Premium Pricing Plans
Morningstar offers a free version – Morningstar Basic – with a more limited menu of tools and features.
Morningstar Premium is available with a 14-day free trial which allows you to evaluate the service. If you choose to continue, the subscription fee is $29.95 per month.
You can also pay the subscription on an annual basis. For example, you can purchase a one-year subscription for $199, which will save you $160 off the monthly subscription price. You can save a little bit more with the two-year subscription, at $349, or the three-year at $449.
Morningstar Premium Pros and Cons
- Morningstar is considered one of the most respected sources of information, analysis, and ratings on funds in individual securities. With Morningstar Premium, you'll have full access to that information.
- The fund screener tools will help you narrow down the very large field of funds to a digestible number of choices.
- The service will provide a breakdown of costs and fees associated with funds you plan to invest in, which allows you to see the full impact of what you'll be paying for owning those funds.
- Ratings are updated regularly, so you'll always have access to the latest information.
- The platform has numerous tools to help new or lightly experienced investors to improve their game.
- The service focuses primarily on mutual funds, and only to a lesser degree on ETFs and individual stocks.
- The monthly subscription fee of nearly $30 will be steep for small investors.
- There's a free version available (“Basic”), but it doesn't provide access to professional-grade analyst reports and ratings. That gives the service only minimal value.
Should You Sign Up with Morningstar Premium?
Morningstar Premium is designed primarily for self-directed investors. It doesn't do the investing for you, (similar to a roboadvisor) but it will give you all the tools, research, and analysis you need to be a better investor.
It's also best suited for long-term investors, particularly those who prefer to invest through mutual funds. In that regard, the service offers one of the most comprehensive packages available in the industry. The screeners they provide will help you select the funds – and even the stocks – you want to invest in, as well as make suggestions for comparable securities. They also provide a breakdown of annual fees for both ETFs and mutual funds.
The X-Ray tool can be invaluable for self-directed investors. If you hold both individual stocks and funds, you may find your portfolio has an excessive allocation in certain stocks. That's because the funds you hold may also include large positions in the same individual stocks you own.
If you'd like more information, or you'd like to sign up for the trial, visit the Morningstar Premium website.