Mutual Fund Research Tools
Stock Research Tools
If you are in the trading world, then you may be interested to hear about Morningstar. Morningstar is an investment news and advisor tool with numerous features, as well as many in-house analysts. So, is Morningstar the right move for you? Read to find out.
Morningstar is an investment research firm that offers investment recommendations from its large team of in-house analysts. While Morningstar does offer tools for investing in stocks, it is most popular among long-term investors looking to move money into mutual funds. Its focus on mutual funds, as well as exchange-traded funds (ETFs) and bonds to a lesser degree, differentiates Morningstar from similar investment advice services such as Zacks. Still, there is a large degree of overlap between the two.
Morningstar offers both free and premium services. Morningstar Premium accounts offer access to the platform’s detailed stock, mutual fund, ETF, and bond ratings as well as advanced screeners and portfolio management tools. While the platform can be used for free with some success, a Morningstar Premium subscription unlocks much more of the information put together by the service’s analysts and is more suitable for traders who are looking to actively invest.
So, is Morningstar Premium worth the money? Keep reading our Morningstar Premium review to find out.
|📈 Features||Investment Research, Investment Analysis/Ratings, Portfolio Tracking|
|⭐ Offers||14-Day Free Trial|
|✅ Best For||Mutual Fund Investors|
|🔁 Alternative To||Zacks|
Morningstar Premium Cost
Morningstar Premium starts with a 14-day free trial, after which the service costs $34.95 per month or $249 per year. You can also purchase a two-year subscription for $399 or a three-year subscription for $499. This pricing is fairly cost-effective for investors who are looking to build long-term investment portfolios.
A Premium account unlocks a number of features that aren’t available to free users. As a Morningstar Premium subscriber, you get:
- Access to portfolio management tools to track your investments
- Curated lists of top stocks and funds to generate new investment ideas
- More detailed research to help you make better investment decisions.
It is definitely worth taking advantage of the free trial to see if these features can help improve your investing. From there, an annual plan makes a lot more sense than a monthly plan since it’s 41% cheaper over the course of a year.
The main reason to get a Premium membership is to get access to Morningstar rating lists. These lists offer picks of the best stocks, ETFs, mutual funds, and bonds based on analysts’ predictions, and they’re updated daily. Morningstar uses its own unique five-star rating system that makes it easy to identify potentially high-quality investments.
For stock traders, the “5-Star Stocks” and “Wide Moat + Undervalued” lists will be the most valuable. These lists focus on stocks that Morningstar analysts feel are undervalued relative to their fair value estimate. However, keep in mind that you’ll need to do most of your own research on any stocks you find on the list.
Unlike Zacks and other stock picking services, stocks are not categorized according to their growth potential, industry, or technical factors. In addition, because the listed stocks are based only on a somewhat murky star rating, you won’t see these lists of highly-rated stocks change on a day-to-day basis as you would on Zacks.
Where Morningstar is unique compared to other services is in offering similar rating lists for ETFs and mutual funds. These lists are again based on funds that have been highly rated by Morningstar analysts, although there is relatively little formulaic explanation behind the ratings. In addition, as you might expect for funds, these lists only turn over every several months.
Finally, Morningstar offers rating lists for five different categories of bonds: high-yield bonds, foreign bond funds, bond index funds, core bond funds, and medalist bond funds. While these rating lists may be a helpful place to start for some bond traders, they don’t offer the level of detail that more advanced traders will need to make informed investment decisions. That said, the main benefit is having access to Morningstar’s proprietary rating system, which makes it easy to get a high-level understanding of the quality of a particular investment.
Morningstar offers a widely used free screener for mutual funds, but Premium subscribers get access to a more advanced fund screening tool. With this tool, you have much more flexibility to build a custom screen one parameter at a time. You can choose from virtually any measurable factor about a mutual fund and add conditionals to determine what makes it through your screen.
Even better, the displayed results in the Premium fund screener are customizable. You can add nearly 100 different columns to the results table, making it significantly easier to sort data based on the criteria that matter to you. However, note that you cannot easily export the results to Excel for further investigation.
The Fund Screener is a great place for investors to start their research. You can use the screener to start building a list of funds that may be of interest to you. From there, you will need to do further research before making any investment decisions.
You’ll also get access to a Premium stock screener that isn’t available to free users. This screener incorporates a lot of Morningstar’s proprietary analysis, including analyst ratings, fair value estimates, and economic moat ratings. Of course, you’ll also find hundreds of financial and performance-related parameters to incorporate into your screens. It’s one of the better stock screeners we’ve seen, although it doesn’t have a lot to offer for finding technical entry and exit points.
Another useful feature for discovering new mutual funds is the similar funds tool. With this tool, you can enter a mutual fund and Morningstar will return a list of funds that are similar in performance, portfolio allocation, and load. This is a useful tool for mutual fund investors looking to diversify, although it may not see enough use to warrant a Premium subscription on its own.
The similar funds tool can also be good for investors who already have a group of mutual funds that match their investment styles. You can use the similar funds screener to help you diversify your investment portfolio with more similar funds. You may also use this tool to find funds that are better than your existing mutual funds. For example, you may find a virtually identical fund with a lower management fee, meaning you can have similar exposure with lower expenses.
Unfortunately, there’s no equivalent to the similar funds tool for ETFs within Morningstar.
The cost analyzer is another useful tool for comparing mutual funds, although it’s not clear why this tool is limited to Premium members since similar free analyzers are available online. The cost analyzer allows you to enter multiple mutual funds and it returns information about how much they will cost based on a given starting investment and recurring investments.
This is particularly beneficial for long-term investors who want to understand how a fund may perform over the next few years.
Morningstar posts numerous new articles written by its analysts every day. Although most of these articles are free for anyone to access without a Morningstar subscription, there are occasional articles that are limited to subscribers. Typically, these articles revolve around stock picks – such as lists of the five best buys in a certain industry – as opposed to articles discussing the merits of a specific stock.
Morningstar Premium subscribers also get access to the Portfolio X-ray to help you manage your asset allocation. What’s great about this tool is that it breaks down what’s inside your funds, which can be really helpful when you have a lot of them and they overlap. You can see what asset classes you’re holding, what sectors you’re most heavily invested in, and how your holdings break down on a value vs. growth spectrum.
Morningstar Platform Differentiators
Morningstar Premium offers a suite of tools to help investors make informed decisions about investing in stocks, mutual funds, ETFs, and bonds. While the platform does offer useful tools for stocks, ETFs, and bonds, it falls short of competitors – most notably Zacks – when it comes to providing actionable information and advanced categorization options.
As a result, Morningstar Premium stands out most for its mutual fund tools and analysis. Having analyst opinions on mutual funds can be extraordinarily helpful for investors given the plethora of funds available, and the rating lists are just useful enough to warrant a Premium membership for frequent fund investors. In addition, the Premium fund screener is arguably the most advanced mutual fund screening tool available on any platform. We also like the Portfolio X-ray tool, which makes it easy to stay on top of your asset allocation over time as you invest in overlapping funds.
Can You Trust Morningstar Ratings?
As mentioned earlier, the star rating system is one of the most valuable features offered by Morningstar. This system makes it easy to research funds that may be best for your personal investment strategy. Of course, in order for this tool to be valuable, you need to be able to trust the ratings. Naturally, this leads to the question, “are the Morningstar ratings trustworthy?”
There are two parts to this answer.
Morningstar is a reputable company, and the analyst grade ratings are credible. That said, it is recommended that investors do their own research as well. You shouldn’t invest in funds just because they have a 5-star rating on Morningstar. Instead, you should use the rating system as a starting point for your research. From there, you should analyze the fund using the research tools that Morningstar offers for free.
You should make it a goal to fully understand the funds you are investing in. This will allow you to determine whether or not the fund is appropriate for your personal investment strategy. For example, the fund VFINX is rated 4-stars, making it an attractive fund. The fund is well managed and has a low expense ratio. That said, investors should only invest in a fund like this if they want exposure to the S&P 500 stocks, as this fund will fluctuate with the market. If you can’t stomach the volatility of S&P 500 stocks, you should look for a fund that is a better match for you.
Which is Better: Zacks or Morningstar?
Since our initial review, we’ve had a few investors reach out and ask how Morningstar compares to Zacks Investment Research. If you are considering both services, we recommend reading our Zacks Premium review so you can get an in-depth look at both offerings. This will help you better understand which one is better for you.
While the services share similar features, they are actually quite unique. Both Zacks and Morningstar use rating systems that make it easy to comb through investments, and both services can be used for investment research across a range of asset classes. That said, Morningstar shines as a mutual fund advisor and Zacks shines as a stock advisor.
If you are looking to invest in mutual funds, Morningstar is definitely the better option. You will have access to features like the Premium fund screener, the similar funds tool, and the X-ray portfolio manager.
If you are looking to invest primarily in stocks, you will likely prefer Zacks. Zacks offers great research and analysis tools for investing in individual stocks, and analyst picks turn over more frequently than they do at Morningstar. While the company offers tools for investing in mutual funds, they are not as comprehensive as those offered by Morningstar.
What Type of Trader is Morningstar Premium Best For?
Morningstar Premium is best for long-term investors who frequently invest in ETFs and mutual funds and want to diversify their portfolios. Morningstar Premium not only offers analyst-backed ratings of top funds to help you discover potential new investments, but also has a highly powerful fund screener to help you find funds that fit your exact specifications. The similar funds tool can also be useful for investors who want to diversify their mutual fund holdings rather than continuously invest in a single fund.
Fortunately, Morningstar offers a 14-day free trial. You should definitely take advantage of the 14-day trial if you are considering using the service. While we’ve done our best to provide the information you need in our Morningstar review, we recommend that you personally test out all of the research tools and unique features and decide whether or not the product is worth paying for.
Morningstar Premium does offer tools for stock traders, but these tools fall far short of those offered on competing platforms at a similar price. Stock traders would likely get more value out of Motley Fool’s Stock Advisor (full Morningstar vs. Motley Fool comparison), Zacks’ Premium Service, or IBD’s Leaderboard and Marketsmith tools.
- Analyst ratings for stocks, mutual funds, bonds, and ETFs
- Premium fund screener is highly customizable
- Similar fund and cost analyzer tools are useful for comparing across funds
- Ratings change over weeks rather than day-to-day, leaving time for further research
- Access to premium articles with stock and fund recommendations
- Stock rating tools fall far short of competing platforms like Zacks
- Data cannot be easily exported to Excel