Why Morningstar is better than Value Research for mutual fund investing

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Here is why I think Morningstar India is better for mutual fund investing – selection, review and analysis – than Value Research India.  I am not affiliated with either portal in any way.  This post is to encourage readers unfamiliar with the features of Morning Star to explore them in peace – without any transaction in mind.

Before I forget, on a side note, those who would like to understand different product categories and differences in investment mandates can explore the website of Franklin Templeton mutual fund (in peace).

Mutual funds can be analyzed in two ways:

quantitatively – with NAV and benchmark history alone, treating the fund like a black box.

qualitatively – by looking at the portfolio, studying the style of the fund management team, the source of alpha etc.

Read more: Quantitative vs. Qualitative Mutual Fund Analysis

Star rating is a quantitative analysis and both portals have a similar rating methodology.

Morningstar has something known as “analyst rating” – gold, silver, bronze – which is based on qualitative metric. Although Morningstar claims that these are ‘forward-looking’ ratings compared to star ratings which are ‘backward-looking’, both analysis use only past performance (what else can one do?!). The only drawback is that these analyst ratings are done by humans (duh!) and therefore they are only available for some funds.

Personally I do not use mutual fund star ratings, but for those who want to, Morningstar is a better resource in more ways than one.

  1. The analyst ratings can be used along with star ratings for a more comprehensive review. This is important because, there are 5-star funds with a bronze rating and a 3-star fund with a gold rating.
  2. The risk & ratings  tab in each morningstar fund page is simply awesome. It offers you 3-year, 5-year and 10-year (a) return grades, (b) risk grades and (c) star rating. This is a quick way to determine consistency in past performance.



Why I do not like star ratings:

The risk & ratings tab also provides risk-adjusted return metrics like beta, Sharpe ratio etc. for 3-year, 5-year and 10-year periods.

To learn more about these metrics: Visualizing Mutual Fund Volatility Measures

If you are comfortable with these metrics, you can screen mutual funds based on returns with the mutual fund screener, create a shortlist of about 5-6 funds and then look for consistent risk-adjusted performance at Morningstar. In comparison, Value Research does not even mention the duration over which these metrics are calculated.

If you do not like these metrics because they are difficult to understand or because you think they are not valid (since markets do not follow normal distribution –Value at risk (VAR): Would you buy a car with a faulty airbag!), then you can consider using downside protection as an alternative:

Mutual Fund Analysis with Upside and Downside Capture Ratios

Downside capture is a measure of how efficient the fund is protecting investors when its benchmark falls. Upside capture provide the opposite information. Take any old fund which has done well and it would have suffered lesser losses than the benchmark.  Consistent downside protection is the source of alpha.

Morningstar provides Downside and Upside capture ratios for 3-year, 5-year and 10-year periods. Lower the downside capture, the better. Higher the upside capture the better.upside-and-downside-1










Alternatively, you can also consider using my downside protection calculators:

Mutual Fund Downside Protection Calculator

Mutual Fund Downside Protection Consistency Analysis (graphical analysis)

If you now head over to the portfolio tab at Morningstar, you can find in-depth information of the holding style and more importantly holding style history. This will help us understand the  correlation between fund size and holding style.














This information is not available at VR. Its style box only gives you information about the dominant holding style.

The detailed portfolio tab at Morningstar gives the entire portfolio (unlike VR) along with the date each stock was acquired. This can be used for understanding the investment strategy better.

The history tab of Morningstar contains asset allocation, equity style and stock sector histories. This can help understand how the fund management reacted to market movements.


In conclusion, MorningStar is a much better source for mutual fund analysis than Value Research. This is not about simplicity. Both portals have the same metrics. If you can navigate VR, you can navigate Morningstar.

Morningstar scores because it realizes the importance of reporting those metrics for different durations.

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  1. What about the personal portfolio tracking feature(s) i.e. transactions and details of one’s own portfolio – which is better? Can you import one portals’ data into another if you want to move across?

  2. I have tried to create portfolio in Morningstar but unable to do so. If anyone has created can they comment in comparison with VR. I use VR, its quite nice and easy.

    1. For the record, this post is about comparing the analytical features of both portals. It is not my intention to compare their folio trackers.

  3. John Galt/Abrar,
    If you want to track your MF Portfolio, use “Automated-mf-portfolio-financial-goal-tracker” created by Pattu Sir. Its best one of its kind. Its not only track your MF portfolio but also you can track your goal.

  4. Agree!!!! MS is better then VR for analysis.
    Only 1 drawbacks in MS, the full portfolio section is updated by 25th of every month for the previous month. The same is 8-10 th in VR.

  5. Not all funds on Morning Star seems to have the upside and downside capture ratio – for eg: ICICI Pru Balanced Advantage Growth doesnt show anything

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