MorningStar Review 2020 – Is Premium Worth It?

Thang Truong
Thang Truong
Updated on:

MorningStar is an investment research company. It’s considered one of the most influential investment research companies in the world. MorningStar prides itself of giving its investors great advice. They grew from a startup to a globally recognized investment research firm in 35 years. Joe Mansueto started the company because he thought it was unfair that the average person didn’t have access to all the information that financial professionals did. He wanted to make investment research available to everyone. 

Today, MorningStar has over 5,000 employees in 27 countries and manages more than $220 billion dollars in assets.

What does MorningStar Offer?

MorningStar is famous for providing reviews of investments. They started with mutual funds, including index mutual funds, expanded to cover ETFs, and have branched out to include stocks as well. They rate everything from one to five stars. A five-star rating is for the best performing stocks and funds, and a one-star rating indicates poor performance.

>>MORE: Roth IRA: Everything You Need to Know

The Differences Between MorningStar Basic and MorningStar Premium

The basic service is free, but you can get more in-depth research and more features with a premium subscription. The basic service gets you access to the article archives, and limited access to Portfolio management, Screeners, and Portfolio X-ray. We’ll get to those in a minute. 

The premium service is $199 a year, or $29.95 a month. This gets you:

  • Analyst reports
  • Top investment picks
  • Portfolio manager
  • Portfolio X-ray
  • Screeners
  • Article Archive

It does come with a free two-week trial, so you can give it a try and see if it works for you.

What do these features do for you? Let’s take a look.

>>MORE: The Best 10 Firms to Open a Roth IRA Account

MorningStar Premium Features: Are They Worth It?

The below features are only available to MorningStar Premium members. We are analyzing each feature in-depth below to provide you with a sneak peak of these features for your assessment. In our opinion, these features are really worth of $199 premium membership fees a year.

MorningStar Analyst Reports:

These provide a detailed summary of what MorningStar experts think of an investment and whether it’s a worthwhile to add to your portfolio. The analyst reports cover both stocks and funds.

For stocks, it reports on the company’s latest quarter earnings, how much debt they have, and how they might perform in the future. They also report on if a company is over-valued or under-valued. This is available only to premium subscribers.

Here’s MorningStar’s analyst report for Facebook stock.

The summary of analyst report provides lots of great insights of the company: its strategy, strengths, weaknesses, especially how the company is competing in its respective markets against their competition, and the forward-looking of the company. I personally love the “fair value” feature of the analyst report. MorningStar’s analyst provides a fair value for the company’s share based on their intensive research. This is the share price the analyst believes to be fair given the company’s performance and its prospects. For example, in the case of Facebook on August 2, 2020, the analyst believes that its fair value’s share price is at $265. On that date, facebook shares are traded at $268.44, which is a bit more expensive than what the analyst believes to be fair. Many investors can use this feature to validate if they should buy a particular stock.

In addition to stocks, analyst reports also cover funds. Given Morningstar’s intensive experience and knowledge in the fund space, their analyst reports about funds are also more intensive.

MorningStar offers two fund ratings for funds: star rating (one to five stars) and gold/silver/bronze rating. If star rating provides insights how a particular fund has performed up to today based on its returns, gold/silver/bronze ratings provide insights how the analyst believes the fund to perform in the future.

Here is an analyst’s report for an ETF – Vanguard Total World Stock ETF. As of Aug 2, 2020, Morningstar analyst believes that this fund has performed relatively well (three stars) in the past, but will perform very well in the future (gold).

MorningStar analyst reports of fund are focused on three dimensions of the fund: process; people; and parent. They also provides a summary and I often find these summary to be valuable. It is simple, concise, and often offers lots of insights why they believe such a fund to be perform well or not so well in the future.

>>MORE: Should I Invest in S&P 500 Index Through An Indexed Universal Life Insurance Policy?

And here is the analyst’s summary of Vanguard Total World Stock ETF

MorningStar’s Top Investment Picks:

If the thought of picking your own investments make you shudder with fear, MorningStar’s Investment Picks might be for you. They compile five-star rated stocks, gold or silver mutual funds, EFTs, all categories of bonds, index funds, target funds, starter funds and anything else they think is worth a look.

This is another great feature for investors, especially if you want to manage your own investment, but do not have time nor expertise to pick stocks or funds for your portfolio.

Of course, upon choosing a stock or fund, you can and should read the analyst report for such stock or fund to understand it better before making the final decision to invest in it.

>>MORE: How Much Do I Need to Save Monthly For Your Retirement?

MorningStar’s Portfolio Manager:

Portfolio Manager lets you keep track of all your investments, analyze your portfolio (premium), and evaluate your strategy (premium). You can create a list of funds and stocks you’re thinking of investing in and have all the information on those funds in one place. 

MorningStar’s Portfolio X-Ray:

This tells you where your money is, for example, Tech, real estate, energy, consumer services. It also tells you which funds are high-yield, aggressive growth, slow growth, or cyclical. It’s valuable to help you diversify your portfolio and make sure you don’t have too many investments in any one category. It tells you how well your investments are meeting your goals.

MorningStar’s Screeners:

Here, you can evaluate funds by category, by rating, by performance, or by risk. You can see things like:

  • Risk
  • Sustainability
  • Annual returns
  • Trailing returns
  • Load-adjusted returns
  • Tax-cost ratio
  • Yield

You can also see if you have similar funds or find funds similar to the ones you already own.

>>MORE: IUL vs. Roth IRA: Which One is Better for Retirement Savings?

MorningStar’s Cost Analyzer:

This is part of the premium subscription, but there are free versions you can find online. You can compare mutual funds and it will tell you how much they cost based on starting and recurring investments. 

>>MORE: How to Start Preparing for Retirement at Age 40?

Who is MorningStar For?

If you’re fascinated by investments and can’t get enough information, MorningStar puts everything you need to know in one place at a reasonable cost. It doesn’t invest for you, but it makes it easy for you to find out everything you need to know so you can decide whether an investment is worth it to you or not. If you’re a self-directed investor, then it’s probably worth the cost. 

On the other hand, some financial brokerage firms have similar research options, or will pay the fee for MorningStar if you have enough money invested (which varies, depending on the company). 

>>MORE: Self-Directed Roth IRA: Its Pros and Cons? How Is It Different from Regular Roth IRA?

MorningStar’s Customer Service

MorningStar earns an A+ rating from the BBB, although they aren’t accredited. There are four one-star reviews and eight complaints in the last three years. The reviews complain about how difficult it is to cancel a premium subscription, although MorningStar says they have updated this process so that it’s easier. 

MorningStar gets a 2.2 score on TrustPilot. Customers complain of frustrating websites, the customer support and the difficulty of canceling. 

Pros of MorningStar:

  • Analysis of stocks, funds, bonds and EFT’s
  • Lots of high-quality information can be found in one place
  • Premium subscription offers tools to help evaluate your portfolio and if it’s meeting your financial goals
  • Screener page is customizable 
  • Free trial
  • Premium articles

Cons of MorningStar:

  • MorningStar was the first of its kind, but now there are competitors that do the same thing. Bloomberg, Thomson Reuters, and Marketwatch are just a few.
  • Free service is somewhat limited
  • MorningStar hasn’t changed much in the last 10 years, whereas competitors are more up to date
  • Can’t export to Excel spreadsheets

Last Thoughts

MorningStar is a fairly low-cost option for beginning investors, or even more sophisticated investors. They provide a wealth of research and data analysis. There are now some other companies that do the same thing, so you will have to evaluate which company is best for you.

Thang Truong
Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

More Stories

Best Self-Directed Roth IRA Companies for 2023

A self-directed Roth IRA is much like a regular Roth IRA, but offers more flexibility as far as what you can invest in. Whereas a regular Roth will only let you invest in stocks, bonds, mutual funds, ETFs, and real-estate investment trusts, a self-directed Roth lets you invest in a greater variety of investment options.  […]

Thang Truong
Thang Truong

IUL vs. Roth IRA: Which One is Better for Your Retirement Savings?

Most people know they have to plan for retirement, but it seems so overwhelming and there are so many places to put your money that many people put off doing anything. However, it’s crucial to save for retirement because Social Security benefits alone are probably not going to provide for a comfortable retirement. IUL and […]

Thang Truong
Thang Truong

Best Roth IRA Companies for 2021

If the thought of paying taxes on money in retirement makes you nervous, (who knows what the tax rate will be by then?) consider a Roth IRA. You’ll invest with after-tax money, so when you go to withdraw it, it’ll be tax-free. It’s also a good option if you think you’ll earn more money over […]

Thang Truong
Thang Truong

Is IUL a Good Investment Strategy for Retirement?

Funding retirement is an age-old question many people wrestle with for decades before they actually retire. How much will be enough? Should I invest all my money in IRA’s or 401(k)’s? What about the stock market? An investment strategy that some people fail to consider is the IUL or Indexed Universal Life Insurance. What is […]

Thang Truong
Thang Truong

Self-Directed Roth IRA: Its Pros and Cons? How Is It Different from Regular Roth IRA?

If you are a savvy investor, you might feel a little limited by the traditional IRA’s or Roth IRA’s. Those retirement accounts only allow you to invest in stocks, bonds, and mutual funds. If you’re interested in investing in things like cryptocurrency or precious metals, you’ll have to consider other opportunities and that’s where self-directed […]

Thang Truong
Thang Truong

How Much Savings is Required to Retire at Age 55?

Retiring at age 55 is nearly ideal. You’ve put plenty of time into a career, and you have numerous achievements and accolades under your belt. On the other hand, you’re still young enough to enjoy life. You can travel, engage in new hobbies, and visit friends and family, all without the health issues that can […]

Thang Truong
Thang Truong

Backdoor Roth IRA: Step-by-step with Vanguard

If you’re a high income earner, or just someone who wants to put away more money for retirement than the IRS thinks you should, you might want to look into a backdoor Roth IRA. This is a legal way to skirt some of the rules around Roth IRA’s so that you can take advantage of […]

Thang Truong
Thang Truong

How to Start Saving for Retirement at Age 50?

As you enter your fifth decade of life, you are probably putting much more thought into retirement and how to make that happen. If you haven’t put much effort into saving for retirement by this age, you still have time to prepare.  These days most people are expected to retire at or around the age […]

Thang Truong
Thang Truong

Gold Roth IRA: Is it A Good Idea?

A gold Roth IRA is just what is sounds like—you’re investing part of your retirement account in gold. You can also invest in platinum, silver, or palladium (palladium is a precious metal, often used in fuel cells). How you feel about a gold Roth IRA is greatly dependent on your stance on investing in precious […]

Thang Truong
Thang Truong

Mega Backdoor Roth IRA: Step-by-Step Setup with Fidelity

You’re probably familiar with traditional IRA’s and Roth IRA’s. You have a 401(k) with employer matching. If you’re a high income earner, you have probably heard of a backdoor Roth IRA, since income limits prevent you from contributing to a Roth if you’re income is high enough. But what is a mega backdoor IRA? What […]

Thang Truong
Thang Truong