The anticipation for future outperformance plays an increasingly pivotal role in Morningstar’s methodology for bestowing its annual awards upon investment funds.
The next two weeks will see Morningstar present its awards for Investing Excellence ceremony in Brussels, Luxembourg and Amsterdam. Each country will see six awards distributed, comprising four for diverse asset classes, alongside the Asset Manager Award and the Asset Manager Sustainable-Investing Award, the latter marking its third presentation in 2024. The nominees have been presented already.
Slight adjustments
Morningstar has slightly adjusted its methodology for determining nominees and winners this year. The merger of its two existing rating systems in May, blending the analyst rating system with the quantitative approach, resulted in the current uniform Morningstar Medalist Rating. Although still anchored in the familiar People, Process, and Parent (Team, Process, and Fund House) pillars, the revamped rating system now exhibits a more forward-looking orientation. While historical performance remains crucial, the evaluation now incorporates additional data and information predicting sustained future performance.
The modification also extends to the awards, with a notable emphasis on the fund house pillar. Eligibility for nomination requires a fund to score above average or high in this pillar. Morningstar’s methodology delves into various aspects of the mutual fund’s parent company, scrutinizing elements such as remuneration policy, communication policy, and cost policy. This scrutiny results in a continuum score, ranging from organizations emphasizing stewardship to those leaning towards salesmanship. Morningstar stipulates that an investment culture rooted in stewardship aligns the organization’s interests with those of investors, whereas a salesmanship-oriented culture, characterized by higher fees and trend-driven product launches, disqualifies a fund house from contention. Nominees must demonstrate above-average or high scores in stewardship.
Team quality
Team quality and the proven strength of processes contribute to the longlisting of funds. The subsequent shortlist of nominees incorporates historical performance (risk-adjusted) and preference votes from Morningstar analysts involved in the selection process.
Winners of the investment funds will be announced at live events in the coming weeks. The Belgium event is scheduled for Wednesday, March 13, at the Skyhall of Brussels Airport, Luxembourg’s event on Thursday, March 14, at Centre Culturel ‹Schéiss› in Luxembourg, and the Netherlands event on Thursday, March 21, at the Heineken Experience in Amsterdam.
Further reading on Investment Officer Luxembourg:
- Morningstar lists 12 funds for Luxembourg excellence award
- Robeco takes Morningstar awards for best asset manager
- Morningstar set for Luxembourg investment awards