Businessweek

anaged Portfolios is a fee-based discretionary asset management service that includes a series of mutual fund, ETF, and stock portfolios tailored to meet specific investment time horizons and risk levels. This program is available through financial advisors. The company’s team of investment professionals uses a disciplined process for asset allocation, fund selection, and portfolio construction. They monitor the portfolios and make adjustments as needed. The company complements these asset management services with online client-management functions, such as risk profiling and access to client statements, transaction capabilities, and performance reports. In 2011, Morningstar Investment Services introduced various new portfolios, including a contrarian ETF series, a real return portfolio, and a set of portfolios subadvised by Ibbotson Associates. The company also signed an agreement with Fiserv to support its middle-office functionality. It offers improved trade management efficiency and scale, connectivity with custodians, supports additional types of portfolios, and provides composite performance reporting. Competition: For Morningstar Managed Portfolios, the company’s primary competitors include Brinker Capital, Curian Capital, Envestnet PMC, Genworth Financial, Loring Ward, SEI Investments, and Symmetry Partners. International Operations The company conducts its business operations outside of the United States, through wholly owned or majority-owned operating subsidiaries doing business in various countries, including Australia, Brazil, Canada, Chile, Denmark, France, Germany, India, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, the People's Republic of China (both Hong Kong and the mainland), Singapore, South Africa, Spain, Switzerland, Taiwan, Thailand, the United Arab Emirates, and the United Kingdom. In addition, the company holds minority ownership positions in operating companies based in Japan and Sweden. As of December 31, 2011, it owned a minority ownership position (approximately 33% of the outstanding shares) in Morningstar Japan K.K. Customers and Markets The company serves approximately 8 million individual investors, 250,000 financial advisors, and 4,500 institutional clients. It has operations in 27 countries. Strategy The company’s strategy includes improving its position in each of its primary market segments by focusing on its three major Web-based platforms; creating a premier global investment database; building thought leadership in independent investment research, including extending leadership position in global fund research, leveraging its capabilities in stocks, and building business in credit research and ratings; and expanding its international brand presence, products, and services. Intellectual Property and Other Proprietary Rights Morningstar and the Morningstar logo are registered marks of the company in the United States and in various other jurisdictions. In addition to trademarks, it holds various patents in the United States and Canada. Seasonality The company's smaller products, such as the Ibbotson Stocks, Bonds, Bills, and Inflation Yearbook and its larger annual investment conference, generate the majority of their sales in the first or second quarter of the year (year ending on December 31, 2011). Government Regulation United States: As of December 31, 2011, three of the company’s subsidiaries, Ibbotson Associates, Inc.; Morningstar Associates, LLC; and Morningstar Investment Services, Inc. are registered as investment advisors with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Morningstar Investment Services is a broker-dealer registered under the Securities Exchange Act of 1934 (Exchange Act) and a member of FINRA. As a NRSRO, Morningstar Credit Ratings, LLC is subject to the requirements and regulations under the Exchange Act. Australia: The company’s subsidiaries that provide financial information services and advice in Australia, Morningstar Australasia Pty Limited and Ibbotson Associates Australia Ltd., must be registered and hold an Australian Financial Ser