Morningstar Category Averages

Morningstar category averages are equal-weighted category returns. The calculation is simply the average of the returns for all the funds in a given category. The standard category average calculation is based on constituents of the category at the end of the period.

Morningstar also provides enhanced return data for US and European categories in the open end, closed end, ETF, variable annuity, separate account, hedge fund, and money market universes. Enhanced category average performance adjusts for new funds entering the category, liquidated/merged funds, and funds that have changed categories. By including obsolete funds in the population when calculating category averages, the data will better reflect the reality of the category's historical returns. In making this adjustment, Morningstar is addressing the problems with survivorship bias -- the tendency for companies or mutual funds to be excluded from a database because they no longer exist.

Please see below for the various scenarios available for the US and European category averages in Morningstar Direct.


Data in the grid view and charts (Fund Analysis, Search Criteria result, Investment List, Chart Templates)

The data points you choose to display will determine whether the category average returns data were calculated using the standard methodology or the enhanced methodology. The methodologies are described above.

Enhanced: historical monthly return, historical quarterly return, yearly return, all custom calculations using returns source data

Standard: daily trailing return, monthly trailing return, quarterly trailing return



Enhanced: Investment Comparison, Investment Summary,Performance Evaluation, Returns-Based Style Analysis, Hedge Fund Summary, Portfolio Aggregation

Standard: user-defined templates (Report Builder), all PDF reports not mentioned above