August 14, 2020

Morningstar has historically not met eligibility criteria for indexes due to free-float. Should we expect this to change in respect to larger MSCI/S&P indexes? Are you aware of the criteria that the stock historically did not meet and the current status of that metric?

As of July 2020, the indexes in which MORN is one of the constituents includes:

  1. MSCI USA IMI Index
  2. S&P Total Market Index (TMI)
  3. S&P Global BMI Index
  4. DJ US Index
  5. FTSE Global All Cap Index
  6. CRSP US Total Market Index
  7. Russell 3000
  8. Morningstar US Market Index

The rules of inclusion in any particular index family vary by index provider; however, market cap is usually an important factor. With a market cap of approximately $6.8 billion as of August 13, 2020, MORN falls toward the low end of the mid-caps.

Selection criteria that can potentially exclude Morningstar from inclusion would be market cap coverage. For example, the MSCI USA index covers the top 85%, and Morningstar is not a part of that index. However, Morningstar is part of the MSCI USA IMI index, which covers the top 99%.

We believe there is no investability criteria that precludes Morningstar Inc. from inclusion in MSCI and/or S&P indexes. In most cases, free float impacts the weight assigned to company in the index portfolio. However, for inclusion purposes, most methodologies look at the company market cap.

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