A component of the Stewardship Grade for Fund Firms (25% of overall U.S. grade)
Morningstar assesses two distinct aspects:
Fund Ownership: Do the managers have significant investments in the funds they oversee? In the U.S., Morningstar’s assessment will be based primarily on manager-ownership levels reported annually to the SEC, and firms that reflect the industry’s best manager-investment practices will earn full credit. Outside the U.S., where fund-ownership disclosure requirements are limited, Morningstar surveys fund companies for this information.
Compensation Structure: Do the compensation plans reward long-term performance or emphasize asset growth? Incentive programs that encourage a focus on short-term performance or asset growth are viewed less favorably.