What is the Morningstar Sustainability Rating?

What is the Morningstar Sustainability Rating?

The Morningstar Sustainability Rating is a reliable and objective way for investors to see how approximately 20,000 mutual funds and exchange-traded funds (ETFs) are meeting environmental, social, and corporate governance (ESG) challenges.

Introduced in August 2016, Morningstar’s Sustainability Ratings are expressed using a five-globe system indicating whether the investment is at the bottom end of the rating for its industry group (one globe), below average (two globes), average (three globes), above average (four globes) or at the high end (five globes) of its industry group rating.

 Investors can find Morningstar’s sustainability ratings on the right-hand side of morningstar.com’s fund quote pages. The Morningstar Portfolio Sustainability Ratings are issued monthly.

Morningstar Sustainability Rating Insights

According to Morningstar, the mutual funds and ETFs that maintain higher sustainability ratings are of a higher-quality and are more sustainable long-term holdings. Therefore, these funds allocate capital to companies that are more favored, less volatile, and maintain a wide economic moat.

With the Morningstar Sustainability Rating, investors can find the ideal investment funds for their individual risk-return profiles while still maintaining a portfolio tilt towards socially responsible investing.

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