"We are aware of stories in circulation that we are going to abandon our qualitative research," head of research Daisy Chee says. "This is clearly not the intention of the management nor the board of directors of Morningstar Research. Instead, we are more determined than ever to enhance the quality and efficiency of our ratings process, a significant component of which is our qualitative research."
The rumours come after comments by Rich that: "Morningstar internationally is very well known for the fact that it does not engage in qualitative research."
In Australia and New Zealand, Morningstar’s ratings methodology is an equal blend of both qualitative and quantitative research. Morningstar says it is convinced that this blend of forward-looking and backward-looking research is crucial in identifying quality funds and fund managers.
"Morningstar often states that even the most accurate and up-to-date quantitative research on its own is simply a 'rear vision mirror' on the past performance of a fund," Chee says.
"On the other hand, forward-looking qualitative research in isolation ignores the fund performance, that is the direct outcome of the business and investment disciplines, philosophies, styles, and processes that is being qualitatively assessed.
"A combination of both qualitative and quantitative research therefore reinforces the strengths of each."
Chee says that a critical part of Morninstar's process improvements is further integration with its operations in the US, to leverage off its technology and research methodologies, with the clear intention of remaining focused on meeting the needs of the local market, investors.
Joint managing director Bevin Desmond has again said that the company is "very committed" to the local operations.
"We are charting a new course for Morningstar in Australia and New Zealand that will allow the company and its employees to enjoy the same success we’ve had in the United States and around the world."
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