Morningstar equity research

C

CFAAtlanta

New member
Joined
Jun 18, 2026
Messages
0
Reaction score
0
What do you guys/gals think of Morningstar equity research? Opinions regarding

(1) quality/reputation
(2) is it a good move for someone trying to get into equity research for the long haul
(3) compensation levels vis-a-vis buyside and sell side (morningstar claims to be independent equity research shop)?
 
My opinion of the quality is that it's pretty basic--that is not very much value add. I doubt that any buy-siders use it to make decisions primarily because of this. Good sell-side research digs a lot more into what customers are saying, buying trends, competitive landscape, maybe it digs up news of a new deal, etc. M* basically gives you a paragraph on the company and why they think it's a good or bad long-term investment. They like a lot of mega-cap stuff, which is presumably an even more efficient market than smaller stocks, making them even less valuable IMO.

I guess if it was the only job in research I could get, I'd definitely consider it. But I view them more as a retail-oriented firm which charges guys like you and me $109 or something a year for their opinion.

Their mutual fund research however, is second to none IMO.

No idea on comp. I can't see how it's as much as a normal sell-side analyst position.
 
Morningstar is OK research for retail customers, but it's much more basic than sell-side research. I'd expect compensation to be considerably less than sell-side research. I can't say for sure, but I also can't imagine their having that much money to pay for research that goes to retail investors rather than institutional ones. It seems like it could be a decent segue into sell-side research, but why not try going straight for sell-side research then? While it could be a respectable intermediate step, you'd also have to commit at least a year or two in order to develop a skill set there before moving onto sell-side research. My guess is that you'd probably be better off trying to get a sell-side position at a second or third tier shop if sell-side research is the career you're going for.
 
It's a reputable company that every retail firm seems to be using right now for their clients. Fidelity for example exclusively presents Morningstar data to their clients.

If anything I would say working there would be great experience. Nobody would know how in depth they are until working there. It's a name everyone knows and would probably open bigger doors for you down the line. You could probably land a mutual fund research job afterwards depending on how well you work your way up at Morningstar.

One thing you will likely learn is how their rating system is calculated and how a mutual fund could go about getting a higher rating and more exposure. That could be a big seller to upstart funds who present the Morningstar data to their clients.

The information is indeed basic, but you are talking Mutual Funds here. What more are you looking for? What they provide is an excellent starting point for anyone researching Mutual Funds. Top holdings, risk assessments of holdings, historical performance evaluations...that's all important information that everyone needs. Anything in depth on a fund is based on the securities in the fund and not on the fund itself.

So I kind of disagree on them being basic in regards to coverage of mutual funds because they do seem to touch on all the key points. They are quite extensive on the mutual funds they follow. The securities inside are another story. But you shouldn't expect them to evaluate the holdings in depth as well because they constantly change.

I think they accomplish what their audience is in need of. I would take the job for the experience. Most equity research jobs you will encounter in the future will be portfolio/fund related. So this would be a good start in evaluating their system.

Imagine going into your next interview at a mutual fund and telling them you know how they do their ratings at Morningstar and played a part in the evaluations and setting of ratings. The fund would likely find a spot for you on the team somewhere. If I managed a fund I would want you around personally. You have research knowledge and experience, I would then teach you how we research companies, and on the reverse side you could provide your input on making adjustments to rate higher from your inside track. I know it sounds silly but that would be a big deal to me.

A lot of clients at retail firms will base their decision between two funds on how many stars it gets from Morningstar. It's crazy, but true.



Edited 1 time(s). Last edit at Sunday, July 9, 2006 at 01:08PM by Fx.
 
Fx, he asked about their equity research, not mutual fund research.
 
From people I have talked to that have worked there in equity research, it is not as bad as they thought and not as bad as everyone makes it out to be. Granted they both left after a year, but got pretty sweet jobs after. The pay is low but the benefits are great and they treat you really well.

I was actually looking to apply there soon but happened to land a pretty good buy-side gig last month. Morningstar obviously wasn�t where I wanted to be long term but definitely better than the back office b.s. I was doing for the past year.
 
"Fx, he asked about their equity research, not mutual fund research."

Either way, I still think it would be a great opportunity. Their equity research is fairly new and unheard of but I would assume they have the capital to stay somewhat competitive and you could make a big impact if you have some great ideas. Worst case scenario you make an internal move to a better research division once you get hired. I like the company personally, never worked there. But I think there is a lot of potential at that firm regarding investment research.
 
Morningstar is a name people know for retail investing. If the guy wants to break into sell-side research or becoming a PM at a buy-side firm, experience at Morningstar, while helpful, probably won't cut it on its own because the analysis is too basic. I didn't think the author was talking about mutual fund research.
 
Just depends on the direction he wants to go I guess. If he wants to ultimately be a PM, he should probably do research for a PM instead.

If he's fairly open minded and would just like to do research and be a top analyst, working at a firm that does research exclusively, even if it's considered basic on the outside, might be beneficial for the long haul.

If you go and work for a PM, sure eventually you could become a PM and will gain some depth on the position that way. But if you want to expand your knowledge of investment research, a firm that provides reseach on mutual funds, stocks, hedge funds and more wouldn't be a bad place to learn a few things. The company is growing and is currently being fueled by ideas and I'm sure has a number of exciting departments you could later get into. I've worked for similar firms and just to let you know, most promotions to better departments are internal moves. You basically get a chance to float around and learn about areas of research that you are most interested in. These tech based firms are also very big on getting ideas from employees. I've seen them promote people who have some profitable ideas to head up major divisions. There is still some wiggle room to make an impact in these firms and get your piece of the executive pie.

If you make a big impact with a few great ideas, get access to some excellent new projects and new departments, you could see your career really take off. I would look at the opportunity from a long term perspective. The research may not be up to snuff right now, but do you think they have the capacity to make it be reputable? Could your participation in the growth be profitable and favorable to your career advancement?

If you are planning to just go in, do your job and leave then it might not be for you. These firms usually have Q&A sessions on a monthly to quarterly basis with employees. A lot of employees just complain and don't offer anything productive during them. Others throw out some profitable ideas and get executive recognition. It really is amazing seeing people getting swept up based on their ideas. So I wouldn't completely discount the firm. When I hear technology/finance I think opportunity. So I can't completely dismiss the firm. If their research isn't advanced enough, go to work at the firm and make it more advanced. If you can't implement change, then leave. You'd be surprised though how receptive they could be. You are only a few great ideas away from career advancement at any firm. Lots of opportunity value at Morningstar in my opinion.
 
Seems like Morningstar is kind of like traiining wheels for apiring analysts or PM's that didnt go to the right school. I wouldnt view it as anything more. If you are going to work at morningstar don't do it for more than 3-4 years. Move up to standard and poors or a research shop or anything better as you wouldnt be more than a BOM by many people's standards.
 
dallas470 Wrote:
-------------------------------------------------------
> Seems like Morningstar is kind of like traiining
> wheels for apiring analysts or PM's that didnt go
> to the right school. I wouldnt view it as
> anything more. If you are going to work at
> morningstar don't do it for more than 3-4 years.
> Move up to standard and poors or a research shop
> or anything better as you wouldnt be more than a
> BOM by many people's standards.

Dalls, What exactly is it that you do that would put you in a position to make any kind of informed comment on this topic?
 
Thanks for you question Irritator but the matter is rather elementary i'm afraid.

First of all after having read many posts on the subject and doing the due diligence i have found that morningstar isnt that highly regarded for employment prospects. This leads me to believe that it would about as easy to get into as a boutique IM shop.

Look, if you can find me 1 harvard grad that started working as an entry-level analyst at M* ,
then I will personally mail you $15. It's a small amount but I am putting my money where my mouth is, which is what is important. Thanks for the post- Dallas.
 
dallas470 wrote:

<<Seems like Morningstar is kind of like traiining wheels for apiring analysts or PM's that didnt go to the right school. I wouldnt view it as anything more. If you are going to work at morningstar don't do it for more than 3-4 years. Move up to standard and poors or a research shop or anything better as you wouldnt be more than a BOM by many people's standards.>>

This isn't so accurate. First of all, I wouldn't go so far as to say that someone who works at Morningstar is a BOM. I'm qualified to say this because I work in sell-side research, and while Morningstar isn't the exact skill set we look for, it's a respectable start. Also, most people who worked at Morningstar for 3-4 years probably wouldn't want to transition to sell-side research anyway. If your goal is to do sell-side research and you can only land a position at Morningstar, there's probably no real purpose to stay there for more than a year. Finally, Standard and Poors isn't an equity research shop.
 
Everyone here talks about it like you are choosing M* over GS. If it were only that easy. If your trying to break in, go for it.
 
numi Wrote:
-------------------------------------------------------

> This isn't so accurate. First of all, I wouldn't
> go so far as to say that someone who works at
> Morningstar is a BOM. I'm qualified to say this
> because I work in sell-side research, and while
> Morningstar isn't the exact skill set we look for,
> it's a respectable start. Also, most people who
> worked at Morningstar for 3-4 years probably
> wouldn't want to transition to sell-side research
> anyway. If your goal is to do sell-side research
> and you can only land a position at Morningstar,
> there's probably no real purpose to stay there for
> more than a year. Finally, Standard and Poors
> isn't an equity research shop.


Thanks for the post numi , but would it be correct to say that

entry level analyst > M* analyst> BOM ? That's what I meant. Also, i didnt say that Standard and Poors was a equity research shop if you want to be specific.

But thanks for your comments on how long to stay at such a place. If i ever got into M* i wouldnt want to give it any more time than it was worth. Again thanks.



Edited 1 time(s). Last edit at Sunday, July 9, 2006 at 10:05PM by dallas470.
 
dallas470 Wrote:
-------------------------------------------------------
> Seems like Morningstar is kind of like traiining
> wheels for apiring analysts or PM's that didnt go
> to the right school. I wouldnt view it as
> anything more. If you are going to work at
> morningstar don't do it for more than 3-4 years.
> Move up to standard and poors or a research shop
> or anything better as you wouldnt be more than a
> BOM by many people's standards.

I realize that I have very few posts to my name, but I have been an avid reader of the AF message boards for quite some time. From what I have gathered, dallas has not passed any CFA exams, nor is he currently anywhere close to the business. So, based upon this, what exactly is this opinion worth? While an analyst at M* is not Fidelity, Goldman, or any of the other sought after finance jobs that 1% of the people get, I can't imagine that for the average analyst (not striving to be average, just not your top 1%)having M* on their resume would ruin their career.
 
braves fan Wrote:
-------------------------------------------------------
While an analyst at M* is not Fidelity,
> Goldman, or any of the other sought after finance
> jobs that 1% of the people get, I can't imagine
> that for the average analyst (not striving to be
> average, just not your top 1%)having M* on their
> resume would ruin their career.

Show me where I said that M* would ruin someone's career? If you read my post that you quoted you would see where I said that it could be a helpful career choice to start out in finance and hopefully move to better things. You must not have very good reading comprehension.
 
Braves Fan is correct. I remember reading that Dallas is a manager in a call center and does not even work in finance. Even though he has not passed any of the exams, he had the nerve to crictize many candidates on this board for waiting until the last minute and cramming for the exams in May.

Dallas, if we need help in managing telemarketers, we'll let you know.
 
Pat --

please post a link for the above comments, i don't remember criticizing anybody's study habits although i'm sure that I have said that I would try to make the best choice when it comes time to prepare for L1. I don't see anything wrong with that at all and I think you are distorting the facts but i'm sure that we can expect that from you from now on. Thanks



Edited 1 time(s). Last edit at Monday, July 10, 2006 at 11:46AM by dallas470.
 
"he had the nerve to crictize many candidates on this board "

WTF ? i'm still laughing about this one.
 
You must log in or register to reply here.
Back
Top