Please quantify to what extent you believe that home offices formally require that advisors only invest in products with Morningstar IP – whether the classic star ratings or analyst ratings? If you were to look at a list of the top 250 or so “home offices” by AUM, what percent would have this formal requirement documented into the process and how has that evolved over time?

Please quantify to what extent you believe that home offices formally require that advisors only invest in products with Morningstar IP – whether the classic star ratings or analyst ratings? If you were to look at a list of the top 250 or so “home offices” by AUM, what percent would have this formal requirement documented into the process and how has that evolved over time? We are not in a position to comment on formal requirements within our clients’ home offices. That said, we see Morningstar data, research, and intellectual property used widely in the due diligence process at firms representing significant assets under management, including by gatekeepers at many of the largest US wealth management firms. Our data and software are commonly available to advisors and researchers at these firms for use in the investment decision-making process. Our research and ratings can meaningfully influence the investment decision-making process. Our Morningstar Rating (or “star rating”) is widely used in fund marketing materials, and past research has shown a correlation between star ratings and fund flows. We also see good home office engagement with the analyst-driven Morningstar Medalist Rating, which provides a forward-looking assessment across mutual funds, exchange-traded funds, and other managed investments, including semiliquid funds and 529 college savings plans. For example, we have an agreement with a top US wealth manager with more than $4 trillion in client assets to provide qualitative analyst coverage on strategies available to advisors. Recent research also finds a correlation between flows and changes in Morningstar Medalist Ratings. Specifically, we found that on average, active funds benefit from net inflows in the one and two years after an upgrade and shed assets following a downgrade. For more on our research on fund flows and ratings, please see When Morningstar Downgrades a Fund, Investors Take Note, available at www.morningstar.com.