Morningstar has reported a global cash profit of more than US$180 million driven by double-digit revenue growth across its licensing, asset-based and transactional business lines.
The result, up about 21 per cent year-on-year, saw Morningstar’s core licensing revenue – including the group’s Data, Direct, and Advisor Workstation products – jump to $663 million compared to US$573 million in the previous year.
Meanwhile, the Morningstar asset-based income from its investment management, workplace and index businesses rose just over 10 per cent to hit US$187.3 million in the 2017 calendar year.
Transaction revenue from credit ratings, conferences and internet advertising sales were up 11 per cent to US$61.5 million, the just-released Morningstar financial report shows.
Despite the strong overall result the Morningstar investment management arm bled almost US$30 billion during 2017 ending the year with just over US$68.3 billion under management – primarily reflecting the exit of $40 billion of institutional money.
The dramatic fall-off was “due to client losses related to a strategic shift away from our customized investment management offerings to[Morningstar-branded] Managed Portfolios”, the annual report says.
This year Morningstar plans to launch “proprietary mutual funds in the United States”, the report says. In Australia the research house also recently rolled out its ‘Next’ range of managed accounts targeting the A$700 billion self-managed superannuation fund sector.
Over the year Morningstar embarked on a number of initiatives, including: upping its stake in environmental, social and governance (ESG) firm, Sustainalytics, to 40 per cent; enhancing the fixed income research capability; integrating public and private equity data in the recently-acquired PitchBook platform; and, rolling out the Best Interest Scorecard designed to help advisers meet new compliance standards.
“… we developed the Morningstar Quantitative Rating for funds, a model-driven, forward-looking rating that is designed to estimate what the Morningstar Analyst Rating would be for thousands of funds not covered by our manager research analysts,” the report says.
The Chicago-headquartered firm saw its global employee numbers jump from 4,550 as at December 2016 to 4,920 at the latest count.
Last week Morningstar also named Nikko Asset Management as NZ fund manager of the year in a finalist line-up that also included Milford Asset Management and Harbour Asset Management.
While Nikko missed out on other sub-category gongs it was a finalist in all of the Morningstar sector awards.
Chris Douglas, Morningstar Asia-Pacific head of manager research ratings, said in a statement: “We applaud the focus on investor engagement and transparency. These traits led to a great experience for their investors, solidifying Nikko’s case as the outstanding fund manager of 2017.”
Nikko, formerly known as Tyndall Asset Management, has embarked on a refresh of its fund range in recent years with a new KiwiSaver product also on the agenda for mid 2018.
“The winners in the Morningstar Awards have all shown themselves to be first-class stewards of their investors’ capital,” Douglas said.
Harbour Asset Management pulled in the NZ equities manager of the year prize while its global equity partner, T Rowe Price, picked up the international shares award.
Russell Investments secured its first Morningstar win as fixed income manager of the year as Milford added to an already-full awards cabinet with the KiwiSaver manager of the year.