Since 2014
Assessing performance of Morningstar’s star rating system for equity investment
Journal of Economic & Financial Studies
View Archive Info| Field | Value | |
| Title |
Assessing performance of Morningstar’s star rating system for equity investment
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| Creator |
Bolster, Paul
Trahan, Emery A. Wang, Pinshuo |
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| Subject |
Investments; Stock Ratings; Stock Performance; Portfolio performance
Asset pricing, investment decisions, ratings and rating agencies, security analyst. G240, G110, G120, G140. |
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| Description |
Both institutional and individual investors have a vast array of advisory and ratings services to assist with security selection. One of the most prominent sources of stock ratings is Morningstar. This is the first large-scale study evaluating the performance of portfolios formed using Morningstar’s Star rating system for stocks. We evaluate the performance of portfolios formed using this rating system. Our results provide evidence that the Morningstar stock rating system allows an investor to build a portfolio with superior absolute and risk-adjusted returns over a long period of time. We show that a modest transaction cost will reduce, but not eliminate, these benefits. Overall, our results indicate that Morningstar ratings effectively discriminate between over- and undervalued stocks over the long term.
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| Publisher |
LAR Center Press
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| Contributor |
—
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| Date |
2016-03-01
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://journalofeconomics.org/index.php/site/article/view/214
10.18533/jefs.v4i1.214 |
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| Source |
Journal of Economic & Financial Studies; Vol 4, No 01 (2016): February; 11-22
2379-9471 2379-9463 |
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| Language |
eng
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| Relation |
http://journalofeconomics.org/index.php/site/article/view/214/277
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| Rights |
Copyright (c) 2016 Paul Bolster
http://creativecommons.org/licenses/by/4.0 |
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