Morningstar revamps medalist rating to show fee, management

Investors will see fund fees and management more clearly from April next year as Morningstar overhauls its Medalist Rating with a new Price Score and transparent pillars.

The global financial services firm has announced the Price Score in revamped rating will range from –2.5 to 2.5, which will directly measure whether a fund’s fees are a competitive advantage or a liability.

Furthermore, the fundamental pillars consisting of People, Process, and Parent will now show more visible inputs including a metric tracking fund managers’ successful experience.

Global Head of Managed Research at Morningstar, Laura Lutton said the changed are designed to empower investors.

“We’re simplifying key elements of our forward-looking Medalist Rating to increase usability and give investors a clearer view into how ratings are determined,” Lutton said.

“These updates provide the clear, easy-to-interpret insights the industry has been seeking.

The firm has also announced that while the five-tier rating scale of Gold, Silver, Bronze, Neutral, and Negative will remain unchanged in the new methodology, the forced rating distribution will be eliminated to reduce arbitrary shifts caused by changes in other funds.

It has further clarified that the analysts assessments will remain central in its work but did not rule out the use of algorithm-generated pillars when no analyst rating is available

“Our updated methodology and approach reinforce the value of human expertise combined with data-driven rigor, resulting in assessments that are deeply informed by real-world experience,” Lutton said.