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.

RELATED TERMS
  1. Morningstar Risk Rating

    A ranking ranging from one to five stars, with one being the ...
  2. Morningstar Inc.

    A Chicago-based investment research firm that compiles and analyzes ...
  3. Investment Grade

    A rating that indicates that a municipal or corporate bond has ...
  4. Fund Manager

    The person(s) resposible for implementing a fund's investing ...
  5. Income Fund

    A type of mutual fund that emphasizes current income, either ...
  6. Basis Grade

    The minimum accepted standard that a deliverable commodity must ...
Related Articles
  1. Mutual Funds & ETFs

    Today's Mutual Fund Industry

    By Richard Loth (Contact | Biography)According to the 2005 Investment Company Institute Fact Book, nearly 600 financial intermediaries in the U.S. and around the world compete in the U.S. mutual ...
  2. 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.
  3. Forex Education

    Fund I-Q No.8: Favorable Analytics

    By Richard Loth (Contact | Biography)The financial media are major purveyors of information on the mutual fund industry as a whole, as well as on individual funds. The quality of this information ...
  4. Forex Education

    Scoring Fund Analytical Commentary

    By Richard Loth (Contact | Biography)This is the entry we need to complete in the Fund Investment-Quality Scorecard for an analysis of a mutual fund's analytical commentary: ...
  5. Retirement

    Morningstar Fund Report

    Based in Chicago, Morningstar Inc. has a 20-year history as a reliable provider of one of the most comprehensive one-page mutual fund reports presently available. The company has expanded into ...
  6. Fundamental Analysis

    Can Japan's Stewardship Code Turn Passive Funds Into Active Managers?

    Institutional investors in Japan have been criticized for being too cozy with corporates. Can a code force them to focus on the needs of beneficiaries?
  7. Options & Futures

    Passive Vs. Active Management

    By Richard Loth (Contact | Biography)In almost all economic endeavors, the quality of management is generally a key component of a successful operation. Managing a mutual fund is no exception ...
  8. Mutual Funds & ETFs

    How Morningstar Rates and Ranks Mutual Funds

    Find out how Morningstar ranks and rates investments, and why the Morningstar star system is so heavily influenced by modern portfolio theory (MPT).
  9. Financial Advisors

    How to Help Clients Navigate 529 Plans

    Here are some of the best practices Morningstar identified that financial advisors should keep in mind when helping clients navigate 529 plans.
  10. Mutual Funds & ETFs

    Top 5 Corporate Bond Mutual Funds (DEECX, FCBFX)

    Learn about the top five mutual funds that invest in corporate bonds that have investment grade quality and speculative credit ratings.
RELATED FAQS
  1. How do I judge a mutual fund's performance?

    Evaluate mutual fund performance utilizing resources such as Morningstar; compare the fund with others in its peer group ... Read Answer >>
  2. Can mutual funds only hold stocks?

    Learn about which types of mutual funds consist of only stocks, which may include stocks in addition to other assets and ... Read Answer >>
  3. Do mutual funds pay interest?

    Find out how and why some mutual funds pay interest, and which types of funds make regular dividend distributions to shareholders ... Read Answer >>
  4. What are some of the most common mutual funds that give exposure to the Internet ...

    Learn about some of the most popular and best performing mutual funds that investors utilize to invest in Internet-related ... Read Answer >>
  5. Where does a hedge fund get its money?

    Learn how a hedge fund is structured and how the managing partner of the fund goes about the process of finding and soliciting ... Read Answer >>
  6. How do I calculate the loan-to-value ratio using Excel?

    Learn what a mutual fund and a money market fund are, and understand the differences between each and how they serve various ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center