Morningstar looks at its process

Morningstar says that it is considering changing its fund rating system in New Zealand to one which is based on quantitative factors.

Currently the firm uses a 50/50 mixture of quantitative and qualitative factors to come up with star ratings for managed funds.

The group has traditionally used a quantitative only rating methodology in the United States because of legal issues. It has refined that process and has announced it will use the new methodology in Australia.

Chicago-based Morningstar Inc managing director Don Phillips says Morningstar wants to standardise its methodology in all the countries it operates in. One of the benefits is that new tools and technology can then be easily rolled out around the world.

Although the group is moving to quantitative methods to rate funds, it will continue to do the qualitative research.

Phillips says there is a misconception that Morningstar does no qualitative research in the United States. He says the company does the research, but it doesn't use it in the ratings process.

Morningstar has had a low presence in New Zealand recently. Phillips says the group is still committed to this country and believes Morningstar still has "a meaningful contribution" to make in this market.

"Our intention is to be here for many years to come," he says.