Editing Morningstar, Inc.

Warning: You are not logged in. Your IP address will be publicly visible if you make any edits. If you log in or create an account, your edits will be attributed to your username, along with other benefits.

The edit can be undone. Please check the comparison below to verify that this is what you want to do, and then publish the changes below to finish undoing the edit.

Latest revision Your text
Line 63: Line 63:
Morningstar believes that diverse teams make better decisions, and contend that a collective mixture of different backgrounds, beliefs, and experiences makes Morningstar a stronger firm. Its goal is to create a more transparent and inclusive financial system. As a global employer, its aim is to build an inclusive environment that encourages open deliberation and unique perspectives, driving creativity, innovation, and better business outcomes. It is doing this with clear objectives, education, and data-driven recruiting, hiring, retention, and employee experience programs.
Morningstar believes that diverse teams make better decisions, and contend that a collective mixture of different backgrounds, beliefs, and experiences makes Morningstar a stronger firm. Its goal is to create a more transparent and inclusive financial system. As a global employer, its aim is to build an inclusive environment that encourages open deliberation and unique perspectives, driving creativity, innovation, and better business outcomes. It is doing this with clear objectives, education, and data-driven recruiting, hiring, retention, and employee experience programs.


As of December 31, 2021, approximately 42% of our employees are female. As of the same date, 50% of its board of directors are female. In the U.S., where Morningstar is currently able to collect information on racial identity, its employee population identifies as approximately 68% White, 22% Asian, 5% Hispanic, 3% Black, and 2% Mixed Race.
As of December 31, 2021, approximately 42% of our employees are female. As of the same date, 50% of its board of directors are female. In the U.S., where we are currently able to collect information on racial identity, its employee population identifies as approximately 68% White, 22% Asian, 5% Hispanic, 3% Black, and 2% Mixed Race.


'''''Employee Engagement'''''  
''Employee Engagement''  


Morningstar recognises the importance of data in assessing its workplace culture and employee engagement. In recent years, it has built robust feedback mechanisms to understand the experience of its colleagues around the globe and to track changes in perceptions, experience, and culture. It tracks the company's attrition or “turnover” rate as an indication of employee commitment and longevity. In 2021, Morningstar's average turnover rate increased to 18.5% from 11.8% in 2020 for all permanent employees globally, reflecting the wider trend of workers rethinking their expectations of work at companies across the world. Even in times of labour market upheaval, year-to-year data shows that its employees continue to respond favourably to questions on topics such as motivation, intent to stay, and overall satisfaction. Based on its internal quarterly measure in December 2021, Morningstar’s overall engagement score increased slightly to 81% from 80% in 2020, continuing the upward trend from 73% in 2019.
We recognize the importance of data in assessing our workplace culture and employee engagement. In recent years, we’ve built robust feedback mechanisms to understand the experience of our colleagues around the globe and to track changes in perceptions, experience, and culture. We track the company's attrition or “turnover” rate as an indication of employee commitment and longevity. In 2021, Morningstar's average turnover rate increased to 18.5% from 11.8% in 2020 for all permanent employees globally, reflecting the wider trend of workers rethinking their expectations of work at companies across the world. Even in times of labour market upheaval, year-to-year data shows that our employees continue to respond favourably to questions on topics such as motivation, intent to stay, and overall satisfaction. Based on our internal quarterly measure in December 2021, Morningstar’s overall engagement score increased slightly to 81% from 80% in 2020, continuing the upward trend from 73% in 2019.


Morningstar believes that an attractive benefits and total rewards package, which includes a voluntary equity ownership program, promotes employee engagement by supporting the financial, emotional, and physical well-being of its employees. It's also proud of its sabbatical program, which is available globally to all employees once every four years of service, and varies between two and six weeks in duration depending on office location and local legal parameters.
Morningstar believes that an attractive benefits and total rewards package, which includes a voluntary equity ownership program, promotes employee engagement by supporting the financial, emotional, and physical well-being of our employees. We're also proud of our sabbatical program, which is available globally to all employees once every four years of service, and varies between two and six weeks in duration depending on office location and local legal parameters.


In 2021, Morningstar researched and enhanced individual benefit programs in multiple locations, including improvements to its retirement benefits in many countries, expanding our Employee Assistance Program benefits into European regions and India, funding an annual health screening in South Korea, introducing risk benefits in Romania, offering a new childcare benefit in India, and enhancing supplemental coverages in Spain and France, to name a few. Many of these enhancements will take effect in the first half of 2022.
In 2021, we researched and enhanced individual benefit programs in multiple locations, including improvements to our retirement benefits in many countries, expanding our Employee Assistance Program benefits into European regions and India, funding an annual health screening in South Korea, introducing risk benefits in Romania, offering a new childcare benefit in India, and enhancing supplemental coverages in Spain and France, to name a few. Many of these enhancements will take effect in the first half of 2022.


'''''Professional Growth'''''
''Professional Growth''


Continuous learning by its employees is crucial to maintain Morningstar’s competitive advantage, engage employees, and pursue its mission. Morningstar's learning and development programs provide its people with access to a diverse set of training and educational opportunities designed to help them reach their potential in ways that fits their interests and builds on their strengths. The company offers its employees annual educational stipends to spend on their choice of professional development activities, while also providing financial support for continuing education and the pursuit of professional certifications. It also makes available a variety of internal opportunities for growth, including programs designed for employees just starting their careers and those at manager and executive levels looking for coaching and training.
Continuous learning by our employees is crucial to maintain Morningstar’s competitive advantage, engage employees, and pursue our mission. Our learning and development programs provide our people with access to a diverse set of training and educational opportunities designed to help them reach their potential in ways that fits their interests and builds on their strengths. We offer our employees annual educational stipends to spend on their choice of professional development activities, while also providing financial support for continuing education and the pursuit of professional certifications. We also make available a variety of internal opportunities for growth, including programs designed for employees just starting their careers and those at manager and executive levels looking for coaching and training.


In 2021, Morningstar piloted a New Managers Mentorship program. This program is designed for newly promoted managers and managers who recently joined Morningstar, providing them the opportunity to engage with, and learn from, tenured managers across the organization.
In 2021, Morningstar piloted a New Managers Mentorship program. This program is designed for newly promoted managers and managers who recently joined Morningstar, providing them the opportunity to engage with, and learn from, tenured managers across the organization.


=== Mission ===
=== Mission ===
Morningstar's mission is to empower investor success. Everything it does is in the service of the investor. The investing ecosystem is complex, and navigating it with confidence requires a trusted, independent voice. Morningstar delivers its perspective to institutions, advisors, and individuals with a single-minded purpose: to empower every investor with conviction that he or she can make better-informed decisions and realize success on his or her own terms.
Our mission is to empower investor success. Everything we do at Morningstar is in the service of the investor. The investing ecosystem is complex, and navigating it with confidence requires a trusted, independent voice. We deliver our perspective to institutions, advisors, and individuals with a single-minded purpose: to empower every investor with conviction that he or she can make better-informed decisions and realize success on his or her own terms.


=== Strategy ===
=== Strategy ===
Morningstar's strategy is to deliver insights and experiences essential to investing. Proprietary data sets, meaningful analytics, independent research, and effective investment strategies are at the core of the powerful digital solutions that investors across its client segments rely on. The company has a keen focus on innovation across data, research, product, and delivery so that it can effectively cater to the evolving needs and expectations of investors globally.
Our strategy is to deliver insights and experiences essential to investing. Proprietary data sets, meaningful analytics, independent research, and effective investment strategies are at the core of the powerful digital solutions that investors across our client segments rely on. We have a keen focus on innovation across data, research, product, and delivery so that we can effectively cater to the evolving needs and expectations of investors globally.


Morningstar executes its strategy through four connected elements: its values, its work, its clients, and its brand. The interaction between these four elements has enabled Morningstar to establish a position in the industry that is differentiated from its competition. The company believes that its intangible assets, including the strength of its brand and its unique intellectual property, are difficult for competitors to replicate. Additionally, Morningstar strives to ensure its customers receive demonstrable value from its solutions causing them to be reluctant to undertake the cost of switching to other providers.
We execute our strategy through four connected elements: our values, our work, our clients, and our brand. The interaction between these four elements has enabled Morningstar to establish a position in the industry that is differentiated from our competition. We believe that our intangible assets, including the strength of our brand and our unique intellectual property, are difficult for competitors to replicate. Additionally, we strive to ensure our customers receive demonstrable value from our solutions causing them to be reluctant to undertake the cost of switching to other providers.


The company is focused on these four strategic priorities:
We are focused on these four strategic priorities:


'''''Deliver differentiated insights across asset classes to public and private market investors'''''
'''''Deliver differentiated insights across asset classes to public and private market investors'''''


Shifting investor needs and expectations, innovative investment approaches and technologies, and a changing political and regulatory environment continue to drive the evolution of the financial services industry. Morningstar remains committed to ensuring that the modern investor is empowered with new data, research, and analytics. This includes:
Shifting investor needs and expectations, innovative investment approaches and technologies, and a changing political and regulatory environment continue to drive the evolution of the financial services industry. We remain committed to ensuring that the modern investor is empowered with new data, research, and analytics. This includes:


* Expanding its data, research, and analytics to deliver unique, personalized, and impactful insights to investors across asset classes.
* Expanding our data, research, and analytics to deliver unique, personalized, and impactful insights to investors across asset classes.
* Optimizing its advisor platform and service position by driving innovation and delivering exceptional investment solutions—including sustainable options—to advisors, driving great outcomes for the clients they serve around the world.
* Optimizing our advisor platform and service position by driving innovation and delivering exceptional investment solutions—including sustainable options—to advisors, driving great outcomes for the clients they serve around the world.
* Providing regulatory and compliance solutions for the wealth, buy-side and asset management segments.
* Providing regulatory and compliance solutions for the wealth, buy-side and asset management segments.
* Pursuing actionable information and developing workflow tools to serve core use cases of identifying private market investment opportunities, raising capital, valuing companies and investments, and buying/selling a company.
* Pursuing actionable information and developing workflow tools to serve core use cases of identifying private market investment opportunities, raising capital, valuing companies and investments, and buying/selling a company.
Line 100: Line 100:
'''''Establish a leading ESG position across each business'''''
'''''Establish a leading ESG position across each business'''''


The Sustainalytics acquisition in 2020 has positioned Morningstar to successfully drive ESG across the investing landscape, which is a pivotal part of the company's long-term strategy. Morningstar remains focused on the growth of Sustainalytics and its ESG ratings, while prioritizing ESG integration across all areas of its business to empower investors with ESG research, solutions, and tools to inform their investment choices. This includes:
The Sustainalytics acquisition in 2020 has positioned us to successfully drive ESG across the investing landscape, which is a pivotal part of our long-term strategy. We remain focused on the growth of Sustainalytics and its ESG ratings, while prioritizing ESG integration across all areas of our business to empower investors with ESG research, solutions, and tools to inform their investment choices. This includes:


* Developing ESG solutions for wealth managers, advisors, and individual investors.
* Developing ESG solutions for wealth managers, advisors, and individual investors.
* Continuing to expand the use of ESG in credit rating workflows, research, and analyses.
* Continuing to expand the use of ESG in credit rating workflows, research, and analyses.
* Making relevant ESG data points available across its software platforms, enabling users to adopt and seamlessly incorporate ESG into their product creation, monitoring, distribution, regulatory, and advice workflows.
* Making relevant ESG data points available across our software platforms enabling users to adopt and seamlessly incorporate ESG into their product creation, monitoring, distribution, regulatory, and advice workflows.
* Integrating ESG into fixed income portfolios and workflows, indexes, and products to support investors with their evolving use cases.
* Integrating ESG into fixed income portfolios and workflows, indexes, and products to support investors with their evolving use cases.


'''''Drive operational excellence and scalability to support growth targets'''''
'''''Drive operational excellence and scalability to support growth targets'''''


Morningstar has grown significantly in the last few years, and as it has continued to focus on growth in 2021 and beyond, it is emphasizing execution and scalability in its operations, processes, and technology. This includes:
We have grown significantly in the last few years, and as we have continued to focus on growth in 2021 and beyond, we are emphasizing execution and scalability in our operations, processes, and technology. This includes:


* Creating a secure, robust, and scalable infrastructure that leverages advanced technology in its data, research, and product quality and delivery efforts.
* Creating a secure, robust, and scalable infrastructure that leverages advanced technology in our data, research, and product quality and delivery efforts.
* Scaling the demand generation function across Morningstar and driving transformation in global sales. customer success, and customer support functions to improve sales effectiveness.
* Scaling the demand generation function across Morningstar and driving transformation in global sales. customer success, and customer support functions to improve sales effectiveness.
* Scaling corporate systems to create more integrated platforms that enable growth of business areas while reducing legacy system fragmentation.
* Scaling corporate systems to create more integrated platforms that enable growth of business areas while reducing legacy system fragmentation.
Line 117: Line 117:
'''''Build an inclusive culture that drives exceptional talent engagement and development'''''
'''''Build an inclusive culture that drives exceptional talent engagement and development'''''


Morningstar is committed to investing in talent and building a culture that realizes its DEI goals. The company is successful because of its team, and building an inclusive culture is of one of its top priorities. It is committed to cultivating a diverse culture that maximizes talent and drives innovation. Morningstar's DEI initiatives are embedded in all areas of its business. This includes:
Morningstar is committed to investing in talent and building a culture that realizes our DEI goals. We are successful because of our team, and building an inclusive culture is of one of our top priorities. We are committed to cultivating a diverse culture that maximizes talent and drives innovation. Our DEI initiatives are embedded in all areas of our business. This includes:


* Emphasizing employee activation and education by providing inclusive leadership training to all managers and hosting conferences and speaker series to generate DEI awareness for all employees.
* Emphasizing employee activation and education by providing inclusive leadership training to all managers and hosting conferences and speaker series to generate DEI awareness for all employees.
Line 123: Line 123:
* Creating company-wide transparency on DEI metrics with employee dashboards and ongoing reviews with leadership.
* Creating company-wide transparency on DEI metrics with employee dashboards and ongoing reviews with leadership.


=== Major Customer Groups ===
Major Customer Groups
Given Morningstar's strategy and core capabilities discussed above, the company focuses on six primary customer groups:
 
Given our strategy and core capabilities discussed above, we focus on six primary customer groups:


# Advisors (including independent financial advisors and those affiliated with Registered Investment Advisors (RIAs), broker/dealers or other intermediaries);
# Advisors (including independent financial advisors and those affiliated with Registered Investment Advisors (RIAs), broker/dealers or other intermediaries);
Line 133: Line 134:
# Individual investors
# Individual investors


==== ''Advisors'' ====
''Advisors''
Financial advisors work with individual investors to help them reach their financial goals. This customer group includes independent advisors at RIA firms, advisors affiliated with independent broker/dealers, dually registered advisors, and “captive” advisors who are employees of a broker/dealer. These broker/dealers include wirehouses, regional broker/dealers, and banks. The advisor landscape is broad in both the U.S. and in other parts of the world where it focuses. Morningstar's largest market is the U.S., where Cerulli Associates estimates there were nearly 294,000 financial advisors as of the end of 2021.
 
Financial advisors work with individual investors to help them reach their financial goals. This customer group includes independent advisors at RIA firms, advisors affiliated with independent broker/dealers, dually registered advisors, and “captive” advisors who are employees of a broker/dealer. These broker/dealers include wirehouses, regional broker/dealers, and banks. The advisor landscape is broad in both the U.S. and in other parts of the world where we focus. Our largest market is the U.S., where Cerulli Associates estimates there were nearly 294,000 financial advisors as of the end of 2021.
 
We believe our deep understanding of individual investors’ needs allows us to work with advisors to help them make more efficient use of their time and deliver better investment outcomes for their clients. Our advisor solutions also draw on Morningstar’s proprietary investment research methodologies and research insights.


Morningstar believes its deep understanding of individual investors’ needs allows us to work with advisors to help them make more efficient use of their time and deliver better investment outcomes for their clients. Its advisor offerings also draw on Morningstar’s proprietary investment research methodologies and research insights.
We sell our advisor-related solutions both directly to independent financial advisors and through enterprise licenses, which allow financial advisors associated with the licensing firm to use our products.


The company sells its advisor-related offerings both directly to independent financial advisors and through enterprise licenses, which allow financial advisors associated with the licensing firm to use its products.
We are expanding the range of services we offer to help financial advisors with all aspects of their daily workflow needs, including investment decision-making, portfolio construction, client monitoring and reporting, practice management, portfolio rebalancing that connects with custodial and trading interfaces, and financial planning. Because advisors are increasingly outsourcing investment management, we're continuing to enhance Morningstar Managed Portfolios to help advisors save time and reduce compliance risk.


Morningstar is expanding the range of services it offers to help financial advisors with all aspects of their daily workflow needs, including investment decision-making, portfolio construction, client monitoring and reporting, practice management, portfolio rebalancing that connects with custodial and trading interfaces, and financial planning. Because advisors are increasingly outsourcing investment management, Morningstar is continuing to enhance Morningstar Managed Portfolios to help advisors save time and reduce compliance risk.
Our main products for financial advisors are Morningstar Advisor Workstation, Morningstar Office, and Morningstar Managed Portfolios.


Morningstar's main products for financial advisors are Morningstar Advisor Workstation, Morningstar Office, and Morningstar Managed Portfolios.
''Asset management''


=== ''Asset management'' ===
Asset management firms manufacture financial products and manage and distribute investment portfolios. This customer group includes individuals involved in sales, marketing, product development, business intelligence, and distribution, as well as investment management (often referred to as the “buy side”), which includes portfolio management and research.
Asset management firms manufacture financial products and manage and distribute investment portfolios. This customer group includes individuals involved in sales, marketing, product development, business intelligence, and distribution, as well as investment management (often referred to as the “buy side”), which includes portfolio management and research.


Morningstar's asset management offerings help companies connect with their clients because of Morningstar’s strong brand presence with both financial advisors and individual investors. Morningstar offers a global reach and have earned investors’ trust in its unbiased approach, investor-centric mission, and thought leadership.
Our asset management offerings help companies connect with their clients because of Morningstar’s strong brand presence with both financial advisors and individual investors. We offer a global reach and have earned investors’ trust in our unbiased approach, investor-centric mission, and thought leadership.
 
The key products we offer for asset management firms include Morningstar Direct, Morningstar Data, and Morningstar Indexes. For the buy side, key products include Morningstar Research, DBRS Morningstar, Morningstar Data, Morningstar Direct, and Sustainalytics.


The key products it offers for asset management firms include Morningstar Direct, Morningstar Data, and Morningstar Indexes. For the buy side, key products include Morningstar Research, DBRS Morningstar, Morningstar Data, Morningstar Direct, and Sustainalytics.
''Fixed income security issuers, arrangers, and investors''


==== ''Fixed income security issuers, arrangers, and investors'' ====
DBRS Morningstar typically issues credit ratings in response to requests from issuers, intermediaries, or investors. DBRS Morningstar credit ratings are requested for corporate short and long-term fixed income obligations, sovereign debt, single project financings and structured finance programs, including securitizations of receivables, such as auto loans, credit cards, residential real estate loans and commercial real estate loans. In addition, claims-paying-ability credit ratings are issued for life, property/casualty, financial guaranty, title, and mortgage insurance companies. DBRS Morningstar's staff analyzes the factors to assess the credit worthiness of an issuer or a security and summarizes the rationale for the credit ratings. DBRS Morningstar credit ratings are assigned and reviewed by a credit rating committee composed of senior credit rating analysts and analytical managers. DBRS Morningstar typically monitors its credit ratings at appropriate intervals depending on the type of the credit rating.
DBRS Morningstar typically issues credit ratings in response to requests from issuers, intermediaries, or investors. DBRS Morningstar credit ratings are requested for corporate short and long-term fixed income obligations, sovereign debt, single project financings and structured finance programs, including securitizations of receivables, such as auto loans, credit cards, residential real estate loans and commercial real estate loans. In addition, claims-paying-ability credit ratings are issued for life, property/casualty, financial guaranty, title, and mortgage insurance companies. DBRS Morningstar's staff analyses the factors to assess the credit worthiness of an issuer or a security and summarizes the rationale for the credit ratings. DBRS Morningstar credit ratings are assigned and reviewed by a credit rating committee composed of senior credit rating analysts and analytical managers. DBRS Morningstar typically monitors its credit ratings at appropriate intervals depending on the type of the credit rating.


Morningstar estimates that the $10 billion global ratings market has grown at a 6.3% compound annual growth rate over the past decade, supported by various secular trends. A continuing low-interest-rate environment supports corporate borrowings, and favourable spreads support high-yield and structured finance bond issuance.
We estimate that the $10 billion global ratings market has grown at a 6.3% compound annual growth rate over the past decade, supported by various secular trends. A continuing low-interest-rate environment supports corporate borrowings, and favorable spreads support high-yield and structured finance bond issuance.


Credit markets continue to evolve and use structured products as a key avenue for capital. Overall demand for structured products by institutional investors, including banks in the U.S. and Europe, remains high.
Credit markets continue to evolve and use structured products as a key avenue for capital. Overall demand for structured products by institutional investors, including banks in the U.S. and Europe, remains high.


As of December 31, 2021, Morningstar served approximately 3,000 issuers of debt.
As of December 31, 2021, we served approximately 3,000 issuers of debt.
 
''Private market/venture capital investors''
 
PitchBook covers the full lifecycle of venture capital, private equity, and merger and acquisition (M&A) activities, including the limited partners, investment funds, and service providers involved. Our main product for this customer group is the PitchBook Platform, an all-in-one research and analysis workstation that gives clients the ability to access data, discover new connections, and conduct research on potential investment opportunities. An Excel plug-in and mobile capabilities are included with the platform license, and Morningstar public equity research can also be delivered through the platform.


==== ''Private market/venture capital investors'' ====
As of December 31, 2021, we served over 8,600 clients, including investment and research firms, venture capital and private equity firms, investment banks, limited partners, lenders, law firms, and accounting firms. We also served corporate development teams at firms across industry sectors.
PitchBook covers the full lifecycle of venture capital, private equity, and merger and acquisition (M&A) activities, including the limited partners, investment funds, and service providers involved. Morningstar's main product for this customer group is the PitchBook Platform, an all-in-one research and analysis workstation that gives clients the ability to access data, discover new connections, and conduct research on potential investment opportunities. An Excel plug-in and mobile capabilities are included with the platform license, and Morningstar public equity research can also be delivered through the platform.


As of December 31, 2021, Morningstar served over 8,600 clients, including investment and research firms, venture capital and private equity firms, investment banks, limited partners, lenders, law firms, and accounting firms. It also served corporate development teams at firms across industry sectors.
''Workplace/retirement''


==== ''Workplace/retirement'' ====
In the U.S., 401(k) retirement plans and other types of defined-contribution (DC) plans, such as 403(b) plans and the Thrift Savings Plan, are the dominant retirement plan offered by employers. According to the Investment Company Institute, there were $10.4 trillion in assets in DC plans at end of the third quarter of 2021, compared to $3.7 trillion in private-sector defined benefit (DB) plans and $7.6 trillion in government DB plans.
In the U.S., 401(k) retirement plans and other types of defined-contribution (DC) plans, such as 403(b) plans and the Thrift Savings Plan, are the dominant retirement plan offered by employers. According to the Investment Company Institute, there were $10.4 trillion in assets in DC plans at end of the third quarter of 2021, compared to $3.7 trillion in private-sector defined benefit (DB) plans and $7.6 trillion in government DB plans.


Although DC plans help millions of workers in the U.S. save for retirement, the industry continues to struggle to boost employee savings rates, to make it easier for companies to offer retirement plans, and to increase access to high-quality investment line-ups. Morningstar believes that a significant market exists for offerings, such as its managed retirement accounts offering, that are designed to address these shortcomings by providing personalized advice that helps individuals build assets for retirement and beyond. Currently, Morningstar's focus is the U.S. market, because it continues to demonstrate healthy growth. In addition, many of its offerings are not easily adapted to foreign markets due to significant differences in regulatory frameworks that govern retirement saving and investing.
Although DC plans help millions of workers in the U.S. save for retirement, the industry continues to struggle to boost employee savings rates, to make it easier for companies to offer retirement plans, and to increase access to high-quality investment lineups. We believe that a significant market exists for solutions, such as our managed retirement accounts offering, that are designed to address these shortcomings by providing personalized advice that helps individuals build assets for retirement and beyond. Currently, our focus is the U.S. market, because it continues to demonstrate healthy growth. In addition, many of our solutions are not easily adapted to foreign markets due to significant differences in regulatory frameworks that govern retirement saving and investing.
 
Our core retirement products (managed retirement accounts, fiduciary services, and custom models) primarily reach individual investors through employers (plan sponsors) that offer DC plans for their employees. As of December 31, 2021, we served 71 retirement service providers and registered investment advisors (RIAs), representing about 297,000 retirement plans. We can work directly with plan sponsors to help them design a suitable retirement program, but more typically, we distribute our retirement services through retirement plan providers that package our advice and investment lineups with administrative and recordkeeping services.
 
Over the past two years we have expanded our distribution network to include retirement plan advisors and asset managers and currently offer three advisor-focused services. The first, Morningstar Plan Advantage, is a practice-management platform that helps advisors to build and manage their retirement plans. That service is currently used by two large broker dealers and has data integrations with 25 recordkeepers. The second service, advisor managed accounts (AMA), enables advisors and asset managers to offer a version of managed accounts that incorporates their firm’s investment allocation philosophies and branding. We also can now offer managed accounts that sit within an IRA product offered by the RIA or recordkeeper. We currently have 10 recordkeepers signed onto the AMA platform with 15 RIAs and one asset management firm offering it. The third is a service that enables asset managers to offer personalized target-date funds using our methodologies, technology, and recordkeeper data connections. These personal target-date funds enable employees in a retirement plan to receive a blended target-date fund based on several data points, including age, salary, savings rate, and account balance.
 
''Individual investors''
 
We offer tools and content for individual investors who invest to build wealth and save for other goals, such as retirement or college tuition. A Gallup survey released in August 2021 found that approximately 56% of individuals in the U.S. invest in the stock market either directly, through mutual funds, or self-directed retirement plans. We design products for individual investors who are actively involved in the investing process and want to take charge of their own investment decisions. We also reach individuals who want to learn more about investing or want to validate the advice they receive from brokers or financial advisors.


Morningstar's core retirement products (managed retirement accounts, fiduciary services, and custom models) primarily reach individual investors through employers (plan sponsors) that offer DC plans for their employees. As of December 31, 2021, Morningstar served 71 retirement service providers and registered investment advisors (RIAs), representing about 297,000 retirement plans. The company can work directly with plan sponsors to help them design a suitable retirement program, but more typically, Morningstar distributes its retirement services through retirement plan providers that package its advice and investment line-ups with administrative and recordkeeping services.
Our main product for individual investors is Morningstar.com, which can be accessed via desktop, tablet, or mobile phone applications, and includes both paid Premium Memberships and free content available to registered users and visitors. We also reach individual investors through licensing our content to other websites, such as Yahoo Finance, MSN Money, and Google Finance.


Over the past two years, Morningstar has expanded its distribution network to include retirement plan advisors and asset managers and currently offer three advisor-focused services. The first, Morningstar Plan Advantage, is a practice-management platform that helps advisors to build and manage their retirement plans. That service is currently used by two large broker dealers and has data integrations with 25 recordkeepers. The second service, advisor managed accounts (AMA), enables advisors and asset managers to offer a version of managed accounts that incorporates their firm’s investment allocation philosophies and branding. Morningstar also can now offer managed accounts that sit within an IRA product offered by the RIA or recordkeeper. It currently has 10 recordkeepers signed onto the AMA platform with 15 RIAs and one asset management firm offering it. The third is a service that enables asset managers to offer personalized target-date funds using our methodologies, technology, and recordkeeper data connections. These personal target-date funds enable employees in a retirement plan to receive a blended target-date fund based on several data points, including age, salary, savings rate, and account balance.
Revenue Types


==== ''Individual investors'' ====
We leverage our proprietary data and research to sell products and services across our portfolio that generate revenue in three primary ways:
Morningstar offers tools and content for individual investors who invest to build wealth and save for other goals, such as retirement or college tuition. A Gallup survey released in August 2021 found that approximately 56% of individuals in the U.S. invest in the stock market either directly, through mutual funds, or self-directed retirement plans. Morningstar designs products for individual investors who are actively involved in the investing process and want to take charge of their own investment decisions. The company also reach individuals who want to learn more about investing or want to validate the advice they receive from brokers or financial advisors.


The company's main product for individual investors is Morningstar.com, which can be accessed via desktop, tablet, or mobile phone applications, and includes both paid Premium Memberships and free content available to registered users and visitors. Morningstar also reaches individual investors through licensing its content to other websites, such as Yahoo Finance, MSN Money, and Google Finance.
''Licensed-based:'' The majority of our research, data, and proprietary platforms are accessed via subscription services that grant access on either a per user or enterprise-basis for a specified period of time. Licensed-based revenue includes Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, PitchBook, Sustainalytics, and other similar products. Licensed-based revenue represented 66.6% of our 2021 consolidated revenue compared to 67.3% in 2020 and 68.9% in 2019.


=== Revenue Types ===
''Asset-based:'' We charge basis points and other fees for assets under management or advisement. Our Morningstar Investment Management, Workplace Solutions, and Morningstar Indexes products are categorized as asset-based revenue. Asset-based revenue represented 15.6% of our 2021 consolidated revenue compared to 16.1% in 2020 and 17.9% in 2019.
Morningstar leverages its proprietary data and research to sell products and services across its portfolio that generate revenue in three primary ways:


# ''Licensed-based:'' The majority of Morningstar's research, data, and proprietary platforms are accessed via subscription services that grant access on either a per user or enterprise-basis for a specified period of time. Licensed-based revenue includes Morningstar Data, Morningstar Direct, Morningstar Advisor Workstation, PitchBook, Sustainalytics, and other similar products. Licensed-based revenue represented 66.6% of its 2021 consolidated revenue compared to 67.3% in 2020 and 68.9% in 2019.
''Transaction-based:'' Credit ratings and ad sales on Morningstar.com comprise the majority of the products that are transactional, or one-time, in nature, versus the recurring revenue streams represented by our licensed and asset-based products. Transaction-based revenue represented 17.8% of our 2021 consolidated revenue compared to 16.6% in 2020 and 13.1% in 2019.
# ''Asset-based:'' Morningstar charges basis points and other fees for assets under management or advisement. Its Morningstar Investment Management, Workplace Solutions, and Morningstar Indexes products are categorized as asset-based revenue. Asset-based revenue represented 15.6% of its 2021 consolidated revenue compared to 16.1% in 2020 and 17.9% in 2019.
# ''Transaction-based:'' Credit ratings and ad sales on Morningstar.com comprise the majority of the products that are transactional, or one-time, in nature, versus the recurring revenue streams represented by its licensed and asset-based products. Transaction-based revenue represented 17.8% of its 2021 consolidated revenue compared to 16.6% in 2020 and 13.1% in 2019.


=== Major Products and Services ===
Major Products and Services
The section below describes its top five products by 2021 revenue and some of its other key products and services.
 
The section below describes our top five products by 2021 revenue and some of our other key products and services.
 
''PitchBook''


==== ''PitchBook'' ====
PitchBook's main product is the PitchBook Platform, an all-in-one research and analysis workstation for investment and research professionals, including venture capital and private equity firms, corporate development teams, investment banks, limited partners, lenders, law firms, and accounting firms. Clients rely on us for a central, easy-to-use platform that provides access to the broadest and most powerful collection of data and research covering the private capital markets, including venture capital, private equity, and M&A activities.To accommodate our clients' diverse needs, the platform offers company profiles for both private and public companies, advanced search functionality, and other features that help to optimize workflow by surfacing relevant information and insights. Our clients source deals, raise funds, build buyer lists, create benchmarks, and network with the PitchBook Platform. PitchBook also offers a mobile application, CRM integrations, an Excel plug-in, data feeds, and flexible, à la carte data solutions that allow clients to access a variety of data points on demand.
PitchBook's main product is the PitchBook Platform, an all-in-one research and analysis workstation for investment and research professionals, including venture capital and private equity firms, corporate development teams, investment banks, limited partners, lenders, law firms, and accounting firms. Clients rely on us for a central, easy-to-use platform that provides access to the broadest and most powerful collection of data and research covering the private capital markets, including venture capital, private equity, and M&A activities.To accommodate our clients' diverse needs, the platform offers company profiles for both private and public companies, advanced search functionality, and other features that help to optimize workflow by surfacing relevant information and insights. Our clients source deals, raise funds, build buyer lists, create benchmarks, and network with the PitchBook Platform. PitchBook also offers a mobile application, CRM integrations, an Excel plug-in, data feeds, and flexible, à la carte data solutions that allow clients to access a variety of data points on demand.


Over the course of 2021, Morningstar continued to make significant investments in its data, research, and product capabilities to create the most comprehensive, fast, and intuitive platform experience for its clients. Improvements included enhanced analytics, data, and better search functionality to help both general and limited partners (GPs and LPs) perform diligence on one another. Morningstar released key updates for alternative asset investors, including a new hedge funds dataset that provides a broader view into alternative fund assets. It also added patent data and analytics and Uniform Commercial Code (UCC) filings data to company profiles, and increased the timeliness of its private financials coverage throughout Europe. Morningstar continued to expand its core datasets in venture capital, private equity, M&A, and debt. The company sharpened its geographic focus on Europe, Asia Pacific and Greater China, increasing the number of companies and funds under coverage in these areas. In Greater China, Morningstar now covers the entire flow of capital from LPs to GPs to companies.
Over the course of 2021, we continued to make significant investments in our data, research, and product capabilities to create the most comprehensive, fast, and intuitive platform experience for our clients. Improvements included enhanced analytics, data, and better search functionality to help both general and limited partners (GPs and LPs) perform diligence on one another. We released key updates for alternative asset investors, including a new hedge funds dataset that provides a broader view into alternative fund assets. We also added patent data and analytics and Uniform Commercial Code (UCC) filings data to company profiles, and increased the timeliness of our private financials coverage throughout Europe. We continued to expand our core datasets in venture capital, private equity, M&A, and debt. We sharpened our geographic focus on Europe, Asia Pacific and Greater China, increasing the number of companies and funds under coverage in these areas. In Greater China, we now cover the entire flow of capital from LPs to GPs to companies.


Morningstar further bolstered its public company data capabilities by introducing new datasets, such as enhanced capital structure data, that give clients the depth of data needed to better determine cost of capital. It also added executive compensation data and earnings calls transcripts to help investors better track management team performance. Additionally, the company extended its modelling and pitch deck creation capabilities with the launch of its MAC/Online Excel Plugin and the release of its PowerPoint plugin.
We further bolstered our public company data capabilities by introducing new datasets, such as enhanced capital structure data, that give clients the depth of data needed to better determine cost of capital. We also added executive compensation data and earnings calls transcripts to help investors better track management team performance. Additionally, we extended our modeling and pitch deck creation capabilities with the launch of our MAC/Online Excel Plugin and the release of our PowerPoint plugin.


Pricing for the PitchBook Platform is based on the number of seats, with the standard base license fees per user and customized prices for large enterprises, boutiques, and start-up firms.
Pricing for the PitchBook Platform is based on the number of seats, with the standard base license fees per user and customized prices for large enterprises, boutiques, and startup firms.


PitchBook's main competitors are CB Insights, Preqin, S&P Capital IQ, and Refinitv.
PitchBook's main competitors are CB Insights, Preqin, S&P Capital IQ, and Refinitv.


PitchBook is Morningstar's largest product based on revenue and comprised 17.1%, 14.5%, and 12.6% of the company's consolidated revenue in 2021, 2020, and 2019, respectively. In 2021, the company estimates that its annual revenue renewal rate for PitchBook was approximately 127% versus 115% in 2020.
PitchBook is our largest product based on revenue and comprised 17.1%, 14.5%, and 12.6% of our consolidated revenue in 2021, 2020, and 2019, respectively. In 2021, we estimate that our annual revenue renewal rate for PitchBook was approximately 127% versus 115% in 2020.


PitchBook had 73,940 licensed users worldwide as of December 31, 2021.  
PitchBook had 73,940 licensed users worldwide as of December 31, 2021.  


==== ''DBRS Morningstar'' ====
''DBRS Morningstar''
 
DBRS Morningstar is the fourth largest credit rating agency in the world, offering a wide range of credit rating services and products that contribute to the transparency of international and domestic credit markets.
DBRS Morningstar is the fourth largest credit rating agency in the world, offering a wide range of credit rating services and products that contribute to the transparency of international and domestic credit markets.


Line 211: Line 224:
Credit ratings are forward-looking opinions on credit risk that reflect the creditworthiness of a company or fixed-income security. They are determined within the framework of a ratings committee that represents a collective assessment of DBRS Morningstar’s opinion rather than the opinion of an individual analyst. These credit ratings are based on information that incorporates both global and local considerations and the use of approved methodologies, and are determined in compliance with policies and procedures designed to avoid or manage conflicts of interest. DBRS Morningstar’s credit rating methodologies are publicly available and support the objectivity and integrity of the credit rating process. DBRS Morningstar also offers a micro-website dedicated to ESG factors deemed relevant to credit ratings analysis.
Credit ratings are forward-looking opinions on credit risk that reflect the creditworthiness of a company or fixed-income security. They are determined within the framework of a ratings committee that represents a collective assessment of DBRS Morningstar’s opinion rather than the opinion of an individual analyst. These credit ratings are based on information that incorporates both global and local considerations and the use of approved methodologies, and are determined in compliance with policies and procedures designed to avoid or manage conflicts of interest. DBRS Morningstar’s credit rating methodologies are publicly available and support the objectivity and integrity of the credit rating process. DBRS Morningstar also offers a micro-website dedicated to ESG factors deemed relevant to credit ratings analysis.


During 2021, Morningstar expanded the way it interacts with issuers and investors by launching a new credit solution provider, Morningstar Credit Information and Analytics (MCIA), that is separate from DBRS Morningstar and which offers credit products and services beyond credit ratings. DealView, a commercial mortgage-bond monitoring service, is a product sold by MCIA. Longer term, MCIA plans to offer modular credit information products that leverage the company's credit expertise and embed in the workflows of internal and external customers.
During 2021, Morningstar expanded the way it interacts with issuers and investors by launching a new credit solution provider, Morningstar Credit Information and Analytics (MCIA), that is separate from DBRS Morningstar and which offers credit products and services beyond credit ratings. DealView, a commercial mortgage-bond monitoring service, is a product sold by MCIA. Longer term, MCIA plans to offer modular credit information products that leverage our credit expertise and embed in the workflows of internal and external customers.


DBRS Morningstar competes with several other firms, including Fitch, Kroll Bond Ratings, Moody’s, and S&P Global Ratings.
DBRS Morningstar competes with several other firms, including Fitch, Kroll Bond Ratings, Moody’s, and S&P Global Ratings.
Line 217: Line 230:
DBRS Morningstar is our second-largest product based on revenue and accounted for 16.0%, 14.9%, and 10.8% of our consolidated revenue in 2021, 2020, and 2019, respectively.
DBRS Morningstar is our second-largest product based on revenue and accounted for 16.0%, 14.9%, and 10.8% of our consolidated revenue in 2021, 2020, and 2019, respectively.


For 2021, Morningstar estimates that transaction-based fees comprised 66% of DBRS Morningstar's revenue; the remainder can be classified as transaction-related, or revenue generated by annual fees tied to surveillance, research, and other services.
For 2021, we estimate that transaction-based fees comprised 66% of DBRS Morningstar's revenue; the remainder can be classified as transaction-related, or revenue generated by annual fees tied to surveillance, research, and other services.


==== ''Morningstar Data'' ====
''Morningstar Data''
Morningstar Data provides institutions with access to a full range of investment data spanning numerous databases, including equity fundamentals, managed investments, fixed income, ESG factors, and market data (such as end-of-day and intra-day pricing, as well as historical tick data). Morningstar aims to match what investors hold in their portfolios with the raw data it's acquired and analytical insights that it derives. The company is well-known for enriching managed investment raw data with research driven intellectual property, resulting in proprietary statistics, such as the Morningstar Category, Morningstar Style Box, and Morningstar Rating, which it distributes through licensed data feeds. Morningstar also offers a wide range of other data, including information on investment performance, risk analytics, full historical portfolio holdings, operations data (such as managed investments' fees and expenses), cash flows, financial statement data, consolidated industry statistics, and investment ownership. Our breadth of global coverage between proprietary and fundamental datasets allows us to combine our datasets and analytical capabilities as a holistic offering. Our clients typically serve retail investors and their intermediaries, and they use Morningstar Data for a variety of investor communications, including websites, print publications, and marketing fact sheets, as well as for internal research and product development. Demand for Morningstar Data increases as clients build digital solutions, prepare for regulatory requirements, and incorporate automation, artificial intelligence, machine learning, and other forms of data analytics into their workflows.
 
Morningstar Data provides institutions with access to a full range of investment data spanning numerous databases, including equity fundamentals, managed investments, fixed income, ESG factors, and market data (such as end-of-day and intra-day pricing, as well as historical tick data). We aim to match what investors hold in their portfolios with the raw data we’ve acquired and analytical insights that we derive. We are well-known for enriching managed investment raw data with research driven intellectual property, resulting in proprietary statistics, such as the Morningstar Category, Morningstar Style Box, and Morningstar Rating, which we distribute through licensed data feeds. We also offer a wide range of other data, including information on investment performance, risk analytics, full historical portfolio holdings, operations data (such as managed investments' fees and expenses), cash flows, financial statement data, consolidated industry statistics, and investment ownership. Our breadth of global coverage between proprietary and fundamental datasets allows us to combine our datasets and analytical capabilities as a holistic offering. Our clients typically serve retail investors and their intermediaries, and they use Morningstar Data for a variety of investor communications, including websites, print publications, and marketing fact sheets, as well as for internal research and product development. Demand for Morningstar Data increases as clients build digital solutions, prepare for regulatory requirements, and incorporate automation, artificial intelligence, machine learning, and other forms of data analytics into their workflows.


The Morningstar Data team applies emerging methods in artificial intelligence to regression, classification, deep learning, natural language processing, and optical character recognition to extract data from structured and unstructured content. The Data team uses a "human in the loop" approach where machine inferences are presented to a Data Analyst for validation. Validated data is published in Morningstar products and used to retrain and continuously improve the Data team's machine learning models. This approach enables Morningstar to produce data faster without compromising the quality of data that our clients use in making sound investment decisions.
The Morningstar Data team applies emerging methods in artificial intelligence to regression, classification, deep learning, natural language processing, and optical character recognition to extract data from structured and unstructured content. The Data team uses a "human in the loop" approach where machine inferences are presented to a Data Analyst for validation. Validated data is published in Morningstar products and used to retrain and continuously improve the Data team's machine learning models. This approach enables Morningstar to produce data faster without compromising the quality of data that our clients use in making sound investment decisions.


In 2021, Morningstar launched new data sets relating to asset management firms’ diversity and DEI-related policies and practices to support clients’ manager selection processes. The company enriched its multi-asset portfolio construction and due diligence analytics with the release of expanded economic exposure data and twelve new fixed income data sets, including option-adjusted analytics, average credit ratings, fixed income sector and country of risk breakdowns. Morningstar increased coverage of model portfolios by 87% to over 2,400 models and released nineteen new model portfolio data points.
In 2021, we launched new data sets relating to asset management firms’ diversity and DEI-related policies and practices to support clients’ manager selection processes. We enriched our multi-asset portfolio construction and due diligence analytics with the release of expanded economic exposure data and twelve new fixed income data sets, including option-adjusted analytics, average credit ratings, fixed income sector and country of risk breakdowns. We increased coverage of model portfolios by 87% to over 2,400 models and released nineteen new model portfolio data points.


Morningstar is continuing to migrate users to the cloud-based Data Services delivery system it launched in 2020. This new system allows users to more easily explore our data capabilities, access the data they specifically want, and have flexibility around format and delivery options. The delivery platform connects data sets across portfolios, corporate entities and underlying instruments, delivering consolidated feeds and improving our customers’ end-to-end user experience. Morningstar will further enhance the data delivery experience for users who wish to configure data sets within Direct or transform data within Analytics Lab, so that data feeds of such content can be more efficiently created by clients and embedded in their wider business workflows. In 2022, Morningstar is also launching new regulatory data offerings in response to global investor protection, capital adequacy and sustainability regulations, as well as new data management offerings to support its asset management and wealth management clients, by driving connectivity across their business functions, and will also expand its asset class coverage to capitalize on the rising importance of alternatives in investment portfolios.
We are continuing to migrate users to the cloud-based Data Services delivery system we launched in 2020. This new system allows users to more easily explore our data capabilities, access the data they specifically want, and have flexibility around format and delivery options. The delivery platform connects data sets across portfolios, corporate entities and underlying instruments, delivering consolidated feeds and improving our customers’ end-to-end user experience. We will further enhance the data delivery experience for users who wish to configure data sets within Direct or transform data within Analytics Lab, so that data feeds of such content can be more efficiently created by clients and embedded in their wider business workflows. In 2022, we are also launching new regulatory data solutions in response to global investor protection, capital adequacy and sustainability regulations, as well as new data management solutions to support our asset management and wealth management clients, by driving connectivity across their business functions, and will also expand our asset class coverage to capitalize on the rising importance of alternatives in investment portfolios.


Pricing for Morningstar Data is based on the number of investment vehicles covered, the amount of information provided for each security, the frequency of updates, the method of delivery, the size of the licensing firm, the level of distribution, and the intended use by the client, otherwise known as the “use-case.”
Pricing for Morningstar Data is based on the number of investment vehicles covered, the amount of information provided for each security, the frequency of updates, the method of delivery, the size of the licensing firm, the level of distribution, and the intended use by the client, otherwise known as the “use-case.”


Morningstar's main global competitors for mutual fund data include Refinitiv and FE fundinfo. The company also competes against smaller players that focus on local or regional information. For market and equity data, Morningstar primarily competes with FactSet, S&P Global, ICE Data Services, Bloomberg, and Refinitiv.
Our main global competitors for mutual fund data include Refinitiv and FE fundinfo. We also compete against smaller players that focus on local or regional information. For market and equity data, we primarily compete with FactSet, S&P Global, ICE Data Services, Bloomberg, and Refinitiv.
 
Morningstar Data is our third-largest product based on revenue and accounted for 14.3%, 15.5%, and 16.7% of our consolidated revenue in 2021, 2020, and 2019, respectively. We estimate that the annual revenue renewal rate for Morningstar Data in 2021 was approximately 100% versus 101% in 2020.  


Morningstar Data is the company's third-largest product based on revenue and accounted for 14.3%, 15.5%, and 16.7% of its consolidated revenue in 2021, 2020, and 2019, respectively. The company estimates that the annual revenue renewal rate for Morningstar Data in 2021 was approximately 100% versus 101% in 2020.
''Morningstar Direct''


==== ''Morningstar Direct'' ====
Morningstar Direct is an investment-analysis platform that delivers rich data and analytics across asset classes, built on Morningstar's global database of both registered and non-registered securities, as well as data from third-party providers. Users can create advanced performance comparisons and in-depth analysis of an investment's underlying investment style, as well as custom-branded reports and presentations. Morningstar Direct helps equity and multi-asset strategy asset managers with market research, product positioning, competitive analysis, and distribution strategies, whereas wealth managers predominately use the tool to assist with manager research, fund selection, and the construction, monitoring, and distribution of model portfolios.
Morningstar Direct is an investment-analysis platform that delivers rich data and analytics across asset classes, built on Morningstar's global database of both registered and non-registered securities, as well as data from third-party providers. Users can create advanced performance comparisons and in-depth analysis of an investment's underlying investment style, as well as custom-branded reports and presentations. Morningstar Direct helps equity and multi-asset strategy asset managers with market research, product positioning, competitive analysis, and distribution strategies, whereas wealth managers predominately use the tool to assist with manager research, fund selection, and the construction, monitoring, and distribution of model portfolios.


Line 241: Line 256:
Analytics Lab is the new big data analytics platform within Morningstar Direct that integrates Jupyter Notebook, an open-source technology, with Morningstar’s proprietary data, research, and investment and portfolio objects. Analytics Lab allows our clients to explore and discover insights from a library of standardized datasets and analytical flows delivered as Notebooks. Our vision is to grant clients access to the open environment, enabling firms to programmatically build custom analytics by integrating their data with Morningstar Direct data and share those automated workflows within their firm.
Analytics Lab is the new big data analytics platform within Morningstar Direct that integrates Jupyter Notebook, an open-source technology, with Morningstar’s proprietary data, research, and investment and portfolio objects. Analytics Lab allows our clients to explore and discover insights from a library of standardized datasets and analytical flows delivered as Notebooks. Our vision is to grant clients access to the open environment, enabling firms to programmatically build custom analytics by integrating their data with Morningstar Direct data and share those automated workflows within their firm.


In 2021, Morningstar introduced a robust collection of new ESG capabilities to aid financial professionals to better fit sustainability within their workflow. Some of these enhancements include ESG groupings within asset flows, European Union (EU) Sustainable Finance Disclosure Regulation (SFDR) article 8 and article 9 designations, Commitment level data, Security Globes, Risk Ratings, and Product Involvement metrics. These are a mixture of data points, research, and ratings, all with the goal of helping to communicate complex data and analysis in manner that is easy for investors to understand and act upon. Morningstar also released new reporting templates in Direct's Presentation Studio that enable clients to communicate their unique ESG stories.
In 2021, we introduced a robust collection of new ESG capabilities to aid financial professionals to better fit sustainability within their workflow. Some of these enhancements include ESG groupings within asset flows, European Union (EU) Sustainable Finance Disclosure Regulation (SFDR) article 8 and article 9 designations, Commitment level data, Security Globes, Risk Ratings, and Product Involvement metrics. These are a mixture of data points, research, and ratings, all with the goal of helping to communicate complex data and analysis in manner that is easy for investors to understand and act upon. We also released new reporting templates in Direct's Presentation Studio that enable clients to communicate their unique ESG stories.


Pricing for Morningstar Direct is based on the number of licenses purchased. Morningstar has simplified its licensing model to eliminate add-on features in an effort to maximize its customer experience and allow users to extract more value from its products.
Pricing for Morningstar Direct is based on the number of licenses purchased. We have simplified our licensing model to eliminate add-on features in an effort to maximize our customer experience and allow users to extract more value from our products.


Morningstar Direct's primary competitors are Bloomberg, eVestment Alliance, FactSet Research System’s Cognity and SPAR, Zephyr, Strategic Insight’s Simfund, and Refinitiv’s Eikon.
Morningstar Direct's primary competitors are Bloomberg, eVestment Alliance, FactSet Research System’s Cognity and SPAR, Zephyr, Strategic Insight’s Simfund, and Refinitiv’s Eikon.


Morningstar Direct is the company's fourth-largest product based on revenue and accounted for 10.2%, 11.4%, and 12.6% of its consolidated revenue in 2021, 2020, and 2019, respectively. Morningstar estimates that its annual revenue renewal rate for Morningstar Direct in 2021 was approximately 97% versus 96% in 2020.
Morningstar Direct is our fourth-largest product based on revenue and accounted for 10.2%, 11.4%, and 12.6% of our consolidated revenue in 2021, 2020, and 2019, respectively. We estimate that our annual revenue renewal rate for Morningstar Direct in 2021 was approximately 97% versus 96% in 2020.


Morningstar Direct had 17,421 licensed users worldwide as of December 31, 2021.
Morningstar Direct had 17,421 licensed users worldwide as of December 31, 2021.


==== ''Investment Management'' ====
''Investment Management''
Investment Management’s flagship offering is Morningstar® Managed PortfoliosSM, an advisor service consisting of model portfolios designed for fee-based independent financial advisors. Its core markets are the U.S., U.K., South Africa, Australia, and India. Morningstar targets like-minded advisors that hire the company to manage a substantial portion of their client’s assets the Morningstar way—putting investors first, keeping costs low, and investing for the long-term. Morningstar builds its multi-asset strategies using mutual funds, ETFs, and individual securities, and tailor them to meet specific investment time horizons, risk levels, and projected outcomes. In 2021, Morningstar surpassed $1 billion in global net flows across its Managed Portfolios.
 
Investment Management’s flagship offering is Morningstar® Managed PortfoliosSM, an advisor service consisting of model portfolios designed for fee-based independent financial advisors. Our core markets are the U.S., U.K., South Africa, Australia, and India. We target like-minded advisors that hire us to manage a substantial portion of their client’s assets the Morningstar way—putting investors first, keeping costs low, and investing for the long-term. We build our multi-asset strategies using mutual funds, ETFs, and individual securities, and tailor them to meet specific investment time horizons, risk levels, and projected outcomes. In 2021, we surpassed $1 billion in global net flows across our Managed Portfolios.


Morningstar Managed Portfolios are available through two core distribution channels: its fee-based discretionary asset management service, also known as a turnkey asset management program (TAMP), or as strategist models on third-party managed account platforms. Morningstar charges asset-based program fees for Managed Portfolios, which are typically based on the distribution channel (i.e., TAMP versus strategist models) and the products contained within the portfolios. Morningstar has TAMPs available in the U.S. and India, and act as a fund and model provider in its other international markets.
Morningstar Managed Portfolios are available through two core distribution channels: our fee-based discretionary asset management service, also known as a turnkey asset management program (TAMP), or as strategist models on third-party managed account platforms. We charge asset-based program fees for Managed Portfolios, which are typically based on the distribution channel (i.e., TAMP versus strategist models) and the products contained within the portfolios. We have TAMPs available in the U.S. and India, and act as a fund and model provider in our other international markets.


Morningstar's TAMP is an end-to-end digital investing experience, in which advisors access its model portfolios through a proprietary wealth management platform that offers functionality, such as risk assessments, proposals, digital account opening and ongoing management, client reporting, customer support, marketing services, and back-office features, such as trading and billing services. Using its TAMP allows the advisor to share fiduciary responsibility with Morningstar.
Our TAMP is an end-to-end digital investing experience, in which advisors access our model portfolios through a proprietary wealth management platform that offers functionality, such as risk assessments, proposals, digital account opening and ongoing management, client reporting, customer support, marketing services, and back-office features, such as trading and billing services. Using our TAMP allows the advisor to share fiduciary responsibility with us.


In 2021, Morningstar agreed to acquire Praemium’s U.K. and international wealth management platform business. Praemium offers proprietary, friction-free, SaaS-based technology and services that allow fee-based advisors to outsource key elements of the advice workflow. The platform will enable Morningstar to expand its wealth management platform capabilities internationally beyond the U.S. and India. Morningstar expects this transaction to close mid-to-late 2022, subject to regulatory approval.
In 2021, Morningstar agreed to acquire Praemium’s U.K. and international wealth management platform business. Praemium offers proprietary, friction-free, SaaS-based technology and services that allow fee-based advisors to outsource key elements of the advice workflow. The platform will enable us to expand our wealth management platform capabilities internationally beyond the U.S. and India. We expect this transaction to close mid-to-late 2022, subject to regulatory approval.


Morningstar continued to enhance the advisor and client experience on its TAMP, primarily augmenting customer support with a digital self-service help center, document submission, and case tracking center. The company plans to launch direct indexing capabilities through the TAMP later in 2022, as part of its recently-announced strategy to build a comprehensive Wealth Management platform leveraging capabilities from Morningstar Office, ByAllAccounts, and Morningstar.com.
We continued to enhance the advisor and client experience on our TAMP, primarily augmenting customer support with a digital self-service help center, document submission, and case tracking center. We plan to launch direct indexing capabilities through the TAMP later in 2022, as part of our recently-announced strategy to build a comprehensive Wealth Management platform leveraging capabilities from Morningstar Office, ByAllAccounts, and Morningstar.com.


Finally, Morningstar continued to see positive flows in its ESG-focused portfolios as an increasing number of advisors and their investor clients sought investment solutions aligned with their sustainable investing inclinations.  
Finally, we continued to see positive flows in our ESG-focused portfolios as an increasing number of advisors and their investor clients sought investment solutions aligned with their sustainable investing inclinations.  


In addition to Morningstar Managed Portfolios, other services it provides include institutional asset-management (e.g., act as a subadvisor) and asset-allocation services for asset managers, broker/dealers, and insurance providers. Morningstar offers these services through a variety of registered entities in Australia, Canada, the United Arab Emirates (UAE), France, India, Japan, South Africa, the U.K., and the U.S.
In addition to Morningstar Managed Portfolios, other services we provide include institutional asset-management (e.g., act as a subadvisor) and asset-allocation services for asset managers, broker/dealers, and insurance providers. We offer these services through a variety of registered entities in Australia, Canada, the United Arab Emirates (UAE), France, India, Japan, South Africa, the U.K., and the U.S.


Morningstar bases pricing for institutional asset-management and asset-allocation services on the scope of work, its degree of investment discretion, and the level of service required. For most of its contracts, Morningstar receives asset-based fees.
We base pricing for institutional asset-management and asset-allocation services on the scope of work, our degree of investment discretion, and the level of service required. For most of our contracts, we receive asset-based fees.


For Morningstar Managed Portfolios offered through its TAMP, Morningstar's primary competitors are AssetMark, Orion/Brinker Capital, and SEI Investments. Its primary strategist offering competitors are Blackrock, Russell, and Vanguard in the U.S., and it faces competition from Financial Express and Tatton in Europe, Middle East, and Africa (EMEA), and Blackrock, Dimensional, and Vanguard in Australia. Morningstar also competes with in-house research teams at independent broker/dealers who build proprietary portfolios for use on brokerage firm platforms, as well other registered investment advisors that provide investment strategies or models on these platforms.
For Morningstar Managed Portfolios offered through our TAMP, our primary competitors are AssetMark, Orion/Brinker Capital, and SEI Investments. Our primary strategist offering competitors are Blackrock, Russell, and Vanguard in the U.S., and we face competition from Financial Express and Tatton in Europe, Middle East, and Africa (EMEA), and Blackrock, Dimensional, and Vanguard in Australia. We also compete with in-house research teams at independent broker/dealers who build proprietary portfolios for use on brokerage firm platforms, as well other registered investment advisors that provide investment strategies or models on these platforms.


Morningstar Investment Management is the company's fifth-largest product based on revenue and comprised 7.4%, 8.5%, and 9.8% of its consolidated revenue in 2021, 2020, and 2019, respectively.
Morningstar Investment Management is our fifth-largest product based on revenue and comprised 7.4%, 8.5%, and 9.8% of our consolidated revenue in 2021, 2020, and 2019, respectively.
 
''Workplace Solutions''


==== ''Workplace Solutions'' ====
Morningstar Workplace Solutions includes several different offerings, including managed retirement accounts (MRA), fiduciary services, Morningstar Lifetime Allocation Funds, and custom models.
Morningstar Workplace Solutions includes several different offerings, including managed retirement accounts (MRA), fiduciary services, Morningstar Lifetime Allocation Funds, and custom models.


Line 283: Line 300:
Our main competitors in fiduciary services are Mesirow and Wilshire Associates, but we are starting to see growing competition from smaller players, such as LeafHouse Financial and IRON Financial. Broker/dealers are also looking to introduce their own fiduciary services distributed through their advisors.
Our main competitors in fiduciary services are Mesirow and Wilshire Associates, but we are starting to see growing competition from smaller players, such as LeafHouse Financial and IRON Financial. Broker/dealers are also looking to introduce their own fiduciary services distributed through their advisors.


With its custom models, Morningstar offers two different services. Morningstar works with retirement plan record-keepers to design scalable offerings for their investment line-ups, including target maturity models and risk-based models. Morningstar also provides custom model services direct to large plan sponsors, creating target date funds that are customized around a plan’s participant demographics and investment menus. For custom models, Morningstar often competes with retirement plan consultants. Morningstar also serves as a non-discretionary sub-advisor and index provider for the Morningstar Lifetime Allocation Funds, a series of target-date CITs offered by UBS Asset Management to retirement plan sponsors. Retirement plan sponsors can select a conservative, moderate, or growth version of the glide path for the funds based on the needs of participants in the plan. For the Lifetime Allocation Funds, Morningstar competes with other providers of target-date funds.
With our custom models, we offer two different services. We work with retirement plan record-keepers to design scalable solutions for their investment lineups, including target maturity models and risk-based models. We also provide custom model services direct to large plan sponsors, creating target date funds that are customized around a plan’s participant demographics and investment menus. For custom models, we often compete with retirement plan consultants. We also serve as a non-discretionary subadvisor and index provider for the Morningstar Lifetime Allocation Funds, a series of target-date CITs offered by UBS Asset Management to retirement plan sponsors. Retirement plan sponsors can select a conservative, moderate, or growth version of the glide path for the funds based on the needs of participants in the plan. For the Lifetime Allocation Funds, we compete with other providers of target-date funds.


In 2021, Morningstar expanded its relationships with eight key retirement RIA clients, giving it a total of 15 RIA clients signed on to use its Advisor Managed Accounts offering. As an extension of its fiduciary services offering, Morningstar also announced the Morningstar ESG Pooled Employer Plan (PEP), which is slated to be launched in early 2022. The PEP is designed to help employees mitigate ESG risk in their retirement portfolios.
In 2021, we expanded our relationships with eight key retirement RIA clients, giving us a total of 15 RIA clients signed on to use our Advisor Managed Accounts solution. As an extension of our fiduciary services offering, we also announced the Morningstar ESG Pooled Employer Plan (PEP), which is slated to be launched in early 2022. The PEP is designed to help employees mitigate ESG risk in their retirement portfolios.


Pricing for Workplace Solutions is generally asset-based and depends on several factors, including the level of services offered (including whether the services involve acting as a fiduciary under the Employee Retirement Income Security Act, or ERISA), the number of participants, the level of systems integration required, total assets under management or advisement, and the availability of competing products.  
Pricing for Workplace Solutions is generally asset-based and depends on several factors, including the level of services offered (including whether the services involve acting as a fiduciary under the Employee Retirement Income Security Act, or ERISA), the number of participants, the level of systems integration required, total assets under management or advisement, and the availability of competing products.  


==== ''Morningstar Advisor Workstation'' ====
''Morningstar Advisor Workstation''
 
Morningstar Advisor Workstation is a web-based research, financial planning, and proposal generation platform that illustrates financial decision trade-offs using our data, research, and robust portfolio analytics. The software is typically sold through an enterprise contract and is primarily for retail advisors due to its strong ties and integrations with home-office applications and processes and a library of Financial Industry Regulatory Authority (FINRA)-reviewed reports for compliance needs. It allows advisors to build and maintain a client portfolio database that can be fully integrated with the home-office firm's back-office technology and resources. This helps advisors present and clearly illustrate their portfolio investment strategies and show the value of their advice.
Morningstar Advisor Workstation is a web-based research, financial planning, and proposal generation platform that illustrates financial decision trade-offs using our data, research, and robust portfolio analytics. The software is typically sold through an enterprise contract and is primarily for retail advisors due to its strong ties and integrations with home-office applications and processes and a library of Financial Industry Regulatory Authority (FINRA)-reviewed reports for compliance needs. It allows advisors to build and maintain a client portfolio database that can be fully integrated with the home-office firm's back-office technology and resources. This helps advisors present and clearly illustrate their portfolio investment strategies and show the value of their advice.


In 2021, Morningstar continued to improve its financial planning workflow by focusing on the Morningstar Risk Ecosystem, a financial planning tool that extends Advisor Workstation’s investment planning and proposal generation capabilities. These capabilities are becoming more important to the market as planning grows more central to the value advisors deliver to clients and regulations put more focus on ensuring investment plans are well suited to investor goals.
In 2021, we continued to improve our financial planning workflow by focusing on the Morningstar Risk Ecosystem, a financial planning tool that extends Advisor Workstation’s investment planning and proposal generation capabilities. These capabilities are becoming more important to the market as planning grows more central to the value advisors deliver to clients and regulations put more focus on ensuring investment plans are well suited to investor goals.


Morningstar also launched IDA, a new in-product ‘Intelligent Digital Assistant’ that has improved client retention through enhanced ways to engage, train, and collect feedback from its users. Advisors can access client portfolios within the companion app or the web version of Morningstar Advisor Workstation to perform analysis, generate client reports, and illustrate decision trade-offs with ease.
We also launched IDA, a new in-product ‘Intelligent Digital Assistant’ that has improved client retention through enhanced ways to engage, train, and collect feedback from our users. Advisors can access client portfolios within the companion app or the web version of Morningstar Advisor Workstation to perform analysis, generate client reports, and illustrate decision trade-offs with ease.


Throughout 2021, Morningstar continued to invest in capabilities to modernize advice and address regulatory changes, including the U.S. SEC’s Regulation Best Interest and the Canadian CSA’s Client Focused Reforms. This included a dedicated workflow to address the “Care Obligation,” which helps advisors find and track their consideration of reasonably available alternatives.
Throughout 2021, we continued to invest in capabilities to modernize advice and address regulatory changes, including the U.S. SEC’s Regulation Best Interest and the Canadian CSA’s Client Focused Reforms. This included a dedicated workflow to address the “Care Obligation,” which helps advisors find and track their consideration of reasonably available alternatives.


Pricing for Morningstar Advisor Workstation varies based on the number of users, as well as the number of databases licensed and level of functionality. Morningstar charges fixed annual fees per licensed user for a base configuration of Morningstar Advisor Workstation, but pricing varies significantly based on the scope of the license.
Pricing for Morningstar Advisor Workstation varies based on the number of users, as well as the number of databases licensed and level of functionality. We charge fixed annual fees per licensed user for a base configuration of Morningstar Advisor Workstation, but pricing varies significantly based on the scope of the license.


Competitors for Morningstar Advisor Workstation include AdvisoryWorld (LPL Financial), YCharts, Riskalyze, ASI, Kwanti, and Financial Express outside of the U.S. Occasionally, broker/dealers also decide to build their own internal tools and attempt to bring their advisors’ practice management tools in-house.
Competitors for Morningstar Advisor Workstation include AdvisoryWorld (LPL Financial), YCharts, Riskalyze, ASI, Kwanti, and Financial Express outside of the U.S. Occasionally, broker/dealers also decide to build their own internal tools and attempt to bring their advisors’ practice management tools in-house.


Morningstar estimates that its annual revenue renewal rate for Advisor Workstation for 2021 was approximately 92% versus 91% in 2020.
We estimate that our annual revenue renewal rate for Advisor Workstation for 2021 was approximately 92% versus 91% in 2020.


As of December 31, 2021, 232 companies held licenses for the enterprise version of Morningstar Advisor Workstation in the U.S. and Canada.
As of December 31, 2021, 232 companies held licenses for the enterprise version of Morningstar Advisor Workstation in the U.S. and Canada.


==== ''Sustainalytics'' ====
''Sustainalytics''
 
Sustainalytics provides ESG data, research, analysis and insights to institutional investors globally, covering equity and fixed income asset classes. Its flagship ESG Ratings also underpin Morningstar’s Sustainability Fund Ratings for mutual funds and ETFs, multiple investable indexes and numerous investment platforms. Sustainalytics also serves issuers and banking institutions through its corporate solutions unit and is notably the world’s largest provider of green bond Second Party Opinions.
Sustainalytics provides ESG data, research, analysis and insights to institutional investors globally, covering equity and fixed income asset classes. Its flagship ESG Ratings also underpin Morningstar’s Sustainability Fund Ratings for mutual funds and ETFs, multiple investable indexes and numerous investment platforms. Sustainalytics also serves issuers and banking institutions through its corporate solutions unit and is notably the world’s largest provider of green bond Second Party Opinions.


The EU Action Plan is a broad sweeping regulation with multiple components that require asset managers to align with the UN’s Sustainable Development Goals (SDGs) and report on portfolio alignment. Investors need high quality ESG research, data and reporting tools to help them comply with the regulation’s components: EU Taxonomy Regulation, SFDR, and EU Benchmarks Regulation.
The EU Action Plan is a broad sweeping regulation with multiple components that require asset managers to align with the UN’s Sustainable Development Goals (SDGs) and report on portfolio alignment. Investors need high quality ESG research, data and reporting tools to help them comply with the regulation’s components: EU Taxonomy Regulation, SFDR, and EU Benchmarks Regulation.


In 2021, Sustainalytics launched several new products under its EU Action Plan Solutions suite, addressing the need for clients to access research and comply with reporting under recently-enacted European regulations. To help investors fulfil sustainable finance disclosure requirements, Morningstar delivered a rich new dataset emphasizing principle adverse indicators (PAIs) that cover sustainability factors and risks. Morningstar also launched a new product providing an holistic view of an investment portfolio's alignment to the EU Taxonomy. For institutional investor clients, Morningstar also worked to incorporate impact metrics and country risk ratings into the Morningstar Sustainability Rating for funds. Corporate issuers were introduced to a new Sustainalytics solution designed to assess ESG risk in a company’s supply chain and to a new Issuer Gateway portal that enables more efficient communication and engagement between the issuers and Sustainalytics. Sustainalytics also expanded its Second-Party Opinions coverage to support companies looking to issue Sustainability-Linked Bonds, and increased the number of publicly-available company-level ESG Risk Ratings to over 14,000.
In 2021, Sustainalytics launched several new products under its EU Action Plan Solutions suite, addressing the need for clients to access research and comply with reporting under recently-enacted European regulations. To help investors fulfil sustainable finance disclosure requirements, we delivered a rich new dataset emphasizing principle adverse indicators (PAIs) that cover sustainability factors and risks. We also launched a new product providing an holistic view of an investment portfolio's alignment to the EU Taxonomy. For institutional investor clients, we also worked to incorporate impact metrics and country risk ratings into the Morningstar Sustainability Rating for funds. Corporate issuers were introduced to a new Sustainalytics solution designed to assess ESG risk in a company’s supply chain and to a new Issuer Gateway portal that enables more efficient communication and engagement between the issuers and Sustainalytics. Sustainalytics also expanded its Second-Party Opinions coverage to support companies looking to issue Sustainability-Linked Bonds, and increased the number of publicly-available company-level ESG Risk Ratings to over 14,000.


Sustainalytics operates on a subscription-based pricing model for its ESG research products, which supports recurring revenue. The corporate solutions unit deploys a model that combines one-time revenue with subscription-based recurring licensing revenue.
Sustainalytics operates on a subscription-based pricing model for its ESG research products, which supports recurring revenue. The corporate solutions unit deploys a model that combines one-time revenue with subscription-based recurring licensing revenue.


Major competitors for Sustainalytics include MSCI, FTSE Russell, Institutional Shareholder Services (ISS), S&P Global, Moody's, ecovadis, and Federated Hermes. While the traditional ESG research market continues to aggressively consolidate, Morningstar expects that the market will continue to evolve as new entrants emerge and investors acquire ESG data from new distributors (for example, directly from stock exchanges). Large asset managers like BlackRock, State Street, UBS, and JP Morgan are also investing heavily to build in-house ESG capabilities and sustainable investing products. New technologies, specifically those that employ artificial intelligence, are facilitating these trends by accelerating the sourcing and use of unstructured ESG data.
Major competitors for Sustainalytics include MSCI, FTSE Russell, Institutional Shareholder Services (ISS), S&P Global, Moody's, ecovadis, and Federated Hermes. While the traditional ESG research market continues to aggressively consolidate, we expect that the market will continue to evolve as new entrants emerge and investors acquire ESG data from new distributors (for example, directly from stock exchanges). Large asset managers like BlackRock, State Street, UBS, and JP Morgan are also investing heavily to build in-house ESG capabilities and sustainable investing products. New technologies, specifically those that employ artificial intelligence, are facilitating these trends by accelerating the sourcing and use of unstructured ESG data.
 
''Morningstar.com''


==== ''Morningstar.com'' ====
Our largest website, Morningstar.com, helps individual investors discover, evaluate, and monitor stocks, ETFs, and mutual funds; build and monitor portfolios; and monitor the markets. Revenue is generated from paid memberships through Morningstar Premium and Internet advertising sales.
Our largest website, Morningstar.com, helps individual investors discover, evaluate, and monitor stocks, ETFs, and mutual funds; build and monitor portfolios; and monitor the markets. Revenue is generated from paid memberships through Morningstar Premium and Internet advertising sales.


Line 332: Line 352:
As of December 31, 2021, Morningstar.com had more than 115,000 paid Premium members in the U.S. plus an additional 15,600 Premium members across other global markets.
As of December 31, 2021, Morningstar.com had more than 115,000 paid Premium members in the U.S. plus an additional 15,600 Premium members across other global markets.


==== ''Morningstar Indexes'' ====
''Morningstar Indexes''
 
Morningstar offers a broad range of market indexes that can be used as performance benchmarks and as the basis of investment products and other portfolio strategies. Drawing on Morningstar's deep intellectual property and focus on the end investor, our indexes track all major global regions and asset classes, including equity, fixed income, and multi-asset.
Morningstar offers a broad range of market indexes that can be used as performance benchmarks and as the basis of investment products and other portfolio strategies. Drawing on Morningstar's deep intellectual property and focus on the end investor, our indexes track all major global regions and asset classes, including equity, fixed income, and multi-asset.


Line 343: Line 364:
Major competitors for Morningstar Indexes include MSCI, FTSE Russell, S&P Dow Jones Indices (offered through S&P Global), and Bloomberg Indices.
Major competitors for Morningstar Indexes include MSCI, FTSE Russell, S&P Dow Jones Indices (offered through S&P Global), and Bloomberg Indices.


=== Largest Customer ===
Largest Customer
 
In 2021, our largest customer accounted for less than 3% of our consolidated revenue.
In 2021, our largest customer accounted for less than 3% of our consolidated revenue.


Line 789: Line 811:
== Financials ==
== Financials ==
{| class="wikitable"
{| class="wikitable"
! colspan="3" |Year  ended December 31 (in millions except per share amounts)
| colspan="3" |Year  ended December 31 (in millions except per share amounts)
! colspan="2" |2021
| colspan="2" |2021
! colspan="2" |2020
| colspan="2" |2020
! colspan="2" |2019
| colspan="2" |2019
|-
|-
| colspan="3" |Revenue
| colspan="3" |Revenue
Line 953: Line 975:
|}
|}
{| class="wikitable"
{| class="wikitable"
! colspan="3" |Year  ended December 31 (in millions)  
| colspan="3" |Year  ended December 31 (in millions)  
! colspan="2" |2021
| colspan="2" |2021
! colspan="2" |2020
| colspan="2" |2020
! colspan="2" |2019
| colspan="2" |2019
|-
|-
| colspan="3" |Consolidated net income
| colspan="3" |Consolidated net income
Line 1,005: Line 1,027:
|}
|}
{| class="wikitable"
{| class="wikitable"
! colspan="3" |As  of December 31 (in millions except share amounts)
| colspan="3" |As  of December 31 (in millions except share amounts)
! colspan="2" |2021
| colspan="2" |2021
! colspan="2" |2020
| colspan="2" |2020
|-
|-
| colspan="3" |Assets
| colspan="3" |Assets
Line 1,489: Line 1,511:
== Notes==
== Notes==


=== Investment risk ===
=== '''Investment risk''' ===
Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Morningstar's beta is 1.12, and is, accordingly, 12% above the market beta (of 1); assuming that a 'low' level of riskiness is between 25% either side of the market beta, then the riskiness of investing in Morningstar is considered to be 'low' (-25%<12%>25%).
Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For example, Morningstar's beta is 1.12, and is, accordingly, 12% above the market beta (of 1); assuming that a 'low' level of riskiness is between 25% either side of the market beta, then the riskiness of investing in Morningstar is considered to be 'low' (-25%<12%>25%).


Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see Stockhub:Copyrights for details). Do not submit copyrighted work without permission!
Cancel Editing help (opens in new window)