Morningstar has announced the launch of its star rating system for UK managed portfolios, enabling investors and financial advisers to benchmark portfolios using the firm’s methodology.

The launch of Morningstar Rating introduced category average, which seek to allow direct peer-to-peer comparison across managed portfolios in the UK.

Morningstar said it was the only UK provider to collect underlying holdings and calculate risk-adjusted performance consistently across managed portfolios.

Its independent methodology will aim to support transparency and credibility.

“This expansion applies Morningstar’s trusted frameworks to a new suite of investments, providing advisers and investors with more decision-making tools,” commented Morningstar principal for multi-asset strategies, Tom Mills.

“Our analysis of the latest UK MPS data reflects the investment regime of the past five to 10 years.

“Portfolios holding slightly more equity than category peers – particularly an extra dose of US equity – received a tailwind, while sustainable investment approaches turned into a headwind.

“While these drivers can ebb and flow, lower costs provide a structural advantage that persists.

“Analysis shows that costs matter – reinforcing Morningstar’s view that lower costs improve the odds of investor success, even if they’re not the only driver.”

Morningstar director of market expansion strategy, Anastasia Georgiou, highlighted that the firm was bringing its star ratings methodology and proprietary IP to UK managed portfolios amid rapid growth for the segment.

“With robust coverage and a consistent, independent approach, we’re giving investors and advisers greater transparency and a clearer way to assess and compare portfolios,” she added.

“This marks an important step in building a dataset that will continue to deliver new insights to the market.”

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