MEXICO CITY, Oct. 14, 2019 — Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today published updated Morningstar Analyst Ratings™ and comprehensive research for 40 of Mexico’s investment portfolios, or “Sociedad de Inversión Escpecializada en Fondos para el Retiro” (Siefores), offered by 10 specialized pension managers, or “Administradoras de Fondos para el Retiro” (Afores). The Analyst Rating for funds represents Morningstar’s conviction in the fund’s ability to outperform on a risk-adjusted basis over the long term. The five-tiered, qualitative Morningstar Analyst Rating™ scale has three positive levels—Gold, Silver, and Bronze—in addition to Neutral and Negative ratings. This year, Morningstar manager research analysts awarded four Silver ratings, 12 Bronze ratings, eight Neutral ratings, and 16 Negative ratings.

“As the Mexican pension system is preparing for possibly its most important reform over the next few months, it continues to play a crucial role in the retirement success of Mexican investors and the overall Mexican economy. The system’s MXN 3.7 trillion of assets under management represent around 15.5% of the country’s gross domestic product,” said Thomas Lancereau, Morningstar’s director of manager research for North America. “In late 2019, the Afores will start to transition to offering target-date funds, which will provide Mexican workers with more-granular portfolios that consider their age and expected retirement date. In parallel to this reform, Mexican workers should also benefit from lower fees in coming years, as the regulating body, CONSAR, and the system’s 10 Afores reached an agreement to steadily lower fees, with the goal of having an average fee of 0.70% by 2024.

“This year’s review of pension fund managers resulted in an upgrade of Afore XXI-Banorte’s Siefores to Bronze from Neutral, as the investment team and process have been strengthened significantly under the leadership of its CIO Sergio Méndez and personnel turnover has been modest,” said Lancereau. “We downgraded the rating for Invercap’s Siefores to Negative from Neutral due to our lack of confidence in the team’s ability to make significant tactical shifts skillfully under its recently revamped investment process. Recent tactical shifts have negatively affected Afore Invercap’s already poor long-term performance record. All other Afores have retained their previous ratings.”

Morningstar analysts rated four mandated Siefores offered by Mexico’s 10 Afores: Siefore Basica 1, SB2, SB3, and SB4.The Morningstar pillar ratings—People, Process, Parent, Performance, and Price—and the overall Analyst Rating are shown below:

* The four investment strategies offered by each Afore received the same pillar and overall Analyst Rating.

An article highlighting the notable changes on Morningstar.mx is available here. All of the ratings and reports are available to the investing public here. An introduction to the Siefores evaluation methodology along with three short, explanatory videos is available here and a guide on how to interpret key data points in the report is linked here.

The research and ratings will also be available in Morningstar DirectSM, the company’s core investment research and analysis platform. Learn more here.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with about $220 billion in assets under advisement and management as of June 30, 2019. The company has operations in 27 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.
Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's Manager Research Group's current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund's or the fund's underlying securities' creditworthiness. This press release is for informational purposes only; references to securities in this press release should not be considered an offer or solicitation to buy or sell the securities.
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