Updated August 17, 2026. Quick answer: the fund does not buy its rating. Morningstar rates funds whether they like the result or not, and then typically charges a licensing fee for the right to use that rating in marketing. Those are two different transactions, and collapsing them is the single most common error in this whole subject. Morningstar also names its own conflict exposure in its annual report to the SEC, including the phrase “referee and the player” — so the concerns below are the company’s own disclosures, not an outside allegation.
Rated is not the same as licensed
From Morningstar’s Form 10-K for the year ended December 31, 2025, filed with the SEC on 2026-02-13, in the risk factors the company writes about itself:
We provide ratings and research on our clients’ investment products, such as ETFs and mutual funds, and we typically charge a licensing fee to use our ratings.
Read the verb. The fee is charged to use the rating — the licence to put the icon on a fact sheet, an advertisement or a website. The rating itself is assigned by Morningstar as a matter of its own research; a fund that hates its two stars does not get to decline them, it simply does not pay to advertise them.
This matters because the two readings lead to opposite conclusions. “Funds pay for their ratings” implies the rating is bought. “Funds pay to use their ratings” implies a marketing licence on research done anyway. The second is what the filing says.
What Morningstar says about its own conflicts
The same passage continues, and the company does not soften it:
We also provide investment advisory and management services, including through our own series of mutual funds, which expose us to claims that we are both the referee and the player in the same industry.
That phrase is Morningstar’s, describing the fact that it runs its own investment products while rating competing ones. And on the pay model, it is specific about scope rather than issuing a blanket reassurance:
Our issuer-pay model in our credit ratings business and for certain of our other ratings products, for which we receive payments from issuers for our ratings versus from the investor consuming such ratings, may also lead to perceptions that our research and ratings in these areas are not independently determined.
Two things are worth holding onto there. The issuer-pay model — where the entity being rated pays for the rating — is named as applying to the credit ratings business and for certain of the company’s other ratings products. Morningstar does not claim that every ratings line is free of it. Equally, the disclosure appears in a risk-factor section describing perceptions of independence, which is what such sections are for; it is not an admission that any specific rating was influenced.
The credit side is separately regulated: Morningstar’s US credit rating entity, DBRS, Inc., is registered with the SEC as a Nationally Recognized Statistical Rating Organization, which carries its own examination requirements.
Where the money actually comes from
Morningstar reported consolidated revenue of $2,445.5 million for 2025, against $2,275.1 million in 2024 — growth of 7.5%. The company splits that revenue three ways, and the split says more about the business than any single line:
| Revenue type | Share of 2025 consolidated revenue | What it is |
|---|---|---|
| License-based | 70.3% | Subscriptions and licences to data, research and software |
| Asset-based | 14.0% | Basis points charged on assets under management and advisement |
| Transaction-based | 15.7% | One-time revenue, plus recurring credit surveillance and research |
So roughly seven dollars in ten arrive as licence and subscription revenue. Ratings sit inside that first line, alongside data feeds and software — which is the structural reason the licensing model exists at all.
The counterweight the filing also supplies
An obvious worry follows from all this: could one very large fund company lean on the ratings shop it pays? The same filing answers with a number:
In 2025, our largest customer accounted for less than 3% of our consolidated revenue.
A largest customer at less than 3% of revenue is a genuinely diversified book. No single asset manager is in a position to threaten a material share of Morningstar’s income, which is the structural check that matters more than any stated policy. It is a fact that cuts against the cynical reading, and it comes from the same document as the disclosures above.
What this does and does not mean for you
- A five-star or Gold rating was not purchased. The rating is assigned independently of whether the fund licenses it.
- But you are seeing a filtered sample. Funds pay to display good ratings, not bad ones. The ratings you encounter in marketing are selected by the fund, even though each individual rating was not.
- Ratings and rankings are still relative. What a rating measures matters more than who paid for what — see stock stars versus fund stars.
- The evidence question is separate. Whether the ratings predict anything is answered on do Morningstar star ratings predict performance?
If you want to know why the ratings turn up on every fund page you visit, that mechanism is here.
There is no product link on this page, deliberately. This site does carry Morningstar affiliate links on other pages, and putting one here — on a page whose whole subject is how Morningstar is paid — would undercut the point of writing it.
Sources
- Morningstar, Inc. Form 10-K for the fiscal year ended December 31, 2025. Filed 2026-02-13. Source document. Read 2026-08-17.
Every figure and quotation on this page was taken from the documents above, each fetched and read on 2026-08-17. Where those documents do not answer a question, this page says so rather than filling the gap.