Introducing Morningstar's New Stewardship Rating for Stocks

English: Corporate Governance (Photo credit: Wikipedia)

 In May,Morningstar Investment Research Center launched a new stewardship rating system, theMorningstar Stewardship Rating for Stocks. They have transitioned from the previous stewardship grade system, which was derived from a somewhat more quantitative measurement of corporate governance practices, to one that focuses more heavily on the quality and depth of a company’s management and board of directors in their roles as stewards of investor capital.
The new system will require their analysts to assign one of three Stewardship Ratings–exemplary, standard, or poor–based on their assessments of how each firm stacks up in regard to capital allocation decisions and stewardship of shareholder capital. They believe their stock analysts have a unique advantage in assessing and communicating a rating of this nature, given their focus on economic moats and credit quality, and they expect it to be applicable for all companies, regardless of domicile, which is something that was not fully attainable with their old system. ... Continue to read.

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