Morningstar has expanded its ‘Star Rating’ methodology to UK managed portfolios, allowing investors and advisers to independently benchmark portfolios using the firm’s methodology for the first time.
The launch also includes category averages, enabling direct peer-to-peer comparison across UK managed portfolios.
Morningstar said it is the only UK provider to collect underlying holdings and calculate risk-adjusted performance consistently across managed portfolios, using its independent methodology to support transparency.
Anastasia Georgiou, director of market expansion strategy at Morningstar, said: “We’re bringing our star ratings methodology and proprietary IP to UK managed portfolios at a time when the segment is growing rapidly.
“With robust coverage and a consistent, independent approach, we’re giving investors and advisers greater transparency and a clearer way to assess and compare portfolios. This marks an important step in building a dataset that will continue to deliver new insights to the market.”
Tom Mills, principal for multi-asset strategies at Morningstar, added: “Our analysis of the latest UK MPS data reflects the investment regime of the past five to 10 years. Portfolios holding slightly more equity than category peers – particularly an extra dose of US equity – received a tailwind, while sustainable investment approaches turned into a headwind.
“While these drivers can ebb and flow, lower costs provide a structural advantage that persists. Analysis shows that costs matter – reinforcing Morningstar’s view that lower costs improve the odds of investor success, even if they’re not the only driver.”
Morningstar launched its UK Managed Portfolio database in July 2022 and now tracks close to 1,500 models.
Main image: jeremy-thomas-E0AHdsENmDg-unsplash
