Here Are Morningstar's Top-Rated Model Portfolios

As of March 1, 1,500 unique model portfolios were reported to Morningstar Direct, the company’s web-based research platform that advisors use to access comprehensive data and independent analysis on thousands of investments. That’s about 50% more than the number of model portfolio reports Morningstar received a year ago and far more than the number that Morningstar actually analyzes.

Model portfolios are not directly investable or regulated so there are no reporting standards or publicly distributed data on performance or asset flows as there are for the underlying funds that comprise the portfolios. Morningstar’s analyses of model portfolios therefore can be useful for advisors that are increasingly drawn to use them because their use gives them more time to spend with clients and to grow their business. Model portfolios can also provide a consistent experience for clients that is scalable, said Kephart.

A recent Morningstar survey of 18 model portfolio providers found that low fees, open architecture and the blending of active and passive portfolios were the most important criteria advisors use when choosing portfolios for the next three years.

Of the 24 series of model portfolios that Morningstar analyzed, 10 were rated neutral, two bronze-neutral, eight bronze, two silver and two gold. None received a negative rating. For 15 of the 24, the managers invested in actual assets that mimic the unique portfolios as a check on their track record.

“Morningstar plans to continue increasing manager research coverage of model portfolios to shed light on this relatively opaque space for investors,” a spokeswoman said.

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