Stewardship Grade


DEFINITION of 'Stewardship Grade'

An evaluative data point in Morningstar's fund and stock reports that assesses the quality of a company's governance practices. Stewardship grades for both funds and stocks range from 'A' (excellent) to 'F' (very poor) based on criteria that measures the effectiveness of fund and corporate managers to consistently act with their shareholders' best interests in mind.

BREAKING DOWN 'Stewardship Grade'

Morningstar initiated its stewardship grades for both the funds and stocks covered by its investment research services in 2004 in response to the mutual fund and corporate scandals prevalent at that time. Morningstar sees a high level of managerial stewardship as an important investment quality for investors to seek out in their selection of funds and stocks.

For funds, five areas of stewardship are evaluated: corporate culture, board quality, manager incentives, fees and regulatory issues.

For stocks, three broad areas are examined: transparency in financial reporting, shareholder friendliness, and incentives, ownership and overall stewardship.

  1. Corporate Governance Quotient - ...

    A metric developed by Institutional Shareholder Services (ISS) ...
  2. Corporate Governance

    The system of rules, practices and processes by which a company ...
  3. Morningstar Inc.

    A Chicago-based investment research firm that compiles and analyzes ...
  4. Best Practices

    A set of guidelines, ethics or ideas that represent the most ...
  5. Ratings Service

    A company, such as Moody's or Standard & Poor's, that rates ...
  6. Internal Controls

    Methods put in place by a company to ensure the integrity of ...
Related Articles
  1. Active Trading

    Morningstar's Trifecta: An Easy Way To Select Mutual Funds

    These three pieces of Morningstar's trifecta can help you understand the quality of mutual funds.
  2. Options & Futures

    Governance Pays

    Learn about how the way a company keeps its management in check can affect the bottom line.
  3. Mutual Funds & ETFs

    Morningstar's Stewardship Grade Scores Big

    Morningstar's service gives investors an idea how well fund companies are safeguarding their interests.
  4. Mutual Funds & ETFs

    American Funds' Top Funds for Retirement

    Planning for retirement in this economic and investment environment is far from easy. American Funds might offer an answer.
  5. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  6. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  7. Mutual Funds & ETFs

    The 8 Most Popular Vanguard Funds for a 401(k)

    Learn about some of the mutual funds in Vanguard's lineup that are popular among 401(k) investors, and find out why you should consider them.
  8. Mutual Funds & ETFs

    Best 3 Vanguard Mutual Funds for Retirement

    Discover the top Vanguard target-date retirement funds with target dates in 2020, 2030 and 2050, and learn about the characteristics of these funds.
  9. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  10. Investing

    What Is a REIT and Does It Belong in My Portfolio?

    Real estate investment trusts offer a unique way for investors to own a real estate portfolio without the risks of owning single properties.
  1. Who is responsible for protecting and managing shareholders' interests?

    The average shareholder, who is typically not involved in the day-to-day operations of the company, relies on several parties ... Read Full Answer >>
  2. How liquid are Vanguard mutual funds?

    The Vanguard mutual fund family is one of the largest and most well-recognized fund family in the financial industry. Its ... Read Full Answer >>
  3. What do states do with unclaimed property?

    Unclaimed property refers to personal accounts in financial institutions or companies that have had no activity and whose ... Read Full Answer >>
  4. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  5. Does OptionsHouse have mutual funds?

    OptionsHouse has access to some mutual funds, but it depends on the fund in which the investor is looking to buy shares. ... Read Full Answer >>
  6. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  3. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  4. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  5. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  6. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
Trading Center