How does Morningstar classify funds and assign categories?
The Morningstar Category™ classification system for funds lets institutions, advisers and investors effectively compare like funds. We group funds which can be reasonably considered to be close investment alternatives, and for which performance and other statistical measures are comparable. Criteria for determining ‘close investment alternatives’ include whether: • The tax treatment and legal characteristics of the funds is the same; • Benchmarks, stated maximum and minimum exposures to asset classes, and possibly actual total exposures to various sectors, are similar and fall within the Morningstar definitions; • The funds could be considered to be alternatives for performance comparisons and other statistical analysis and in constructing an investor’s portfolio; • The fund’s investment style and market capitalisation constituency is considered to be highly consistent for portfolio construction purposes; and • There are any other criteria that would be considered relevant by Morningst
