Morningstar upgrades research platform

The most significant addition to Morningstar Direct is performance attribution analysis. This new functionality allows users to quantify and analyze the impact of portfolio decisions, like sector weighting or security selection, on equity performance. Users can perform attribution analysis on their own private portfolios, imported as frequently as daily, in addition to the more than 30,000 actively managed equity investments in the Morningstar database.

Performance attribution analysis examines differences in performance between an actively managed portfolio and a benchmark. The analysis attempts to explain relative under- or over-performance in terms of a managers' region, sector, style, or market-cap weightings, and security selection. In Morningstar Direct, users can benchmark performance to another fund, a custom or blended peer group, a Morningstar Category, or a selection from more than 30,000 indexes. Asset managers can use performance attribution to explain which stocks or weighting decisions are driving their investment performance as well as their peers'. Consultants and institutional investors can use Morningstar Direct for performance attribution analysis as part of their due diligence research during the selection process without the need for data collection.

"Attribution analysis gives our users unparalleled insight into how manager decisions impact returns, and allows portfolio managers to explain the value they add--the active return. They can examine more timely imported portfolios or select portfolios from one of the most complete investment holdings databases in the industry," said Xiaohua Xia, head of Morningstar's Institutional Software Business Unit. "We believe the new performance attribution capabilities, combined with tools to execute peer, style, and performance analysis, provide investment professionals with all the resources they need to evaluate and select investments, create robust portfolios, and conduct competitive analysis."