Morningstar buys Andex chart creators

By Mark Noble | May 4, 2009 | Last updated on May 4, 2009
3 min read

Morningstar Research continues to expand with its latest acquisition of Windsor, Ont.-based Andex Associates. It’s the second major purchase for Morningstar in as many weeks, as the firm looks to add services that reflect greater usage of non-mutual fund products by advisors.

When it comes to mutual fund intelligence, Morningstar is by far the industry leader. While mutual funds remain the core product holding for Canadian advisors and retail investors, there seems to be a greater diversity of products being used, particularly by higher-net-worth investors.

Morningstar’s acquisition of Andex Associates, best known for its Andex Charts, and its purchase two weeks ago of Computerized Portfolio Management Services (a privately owned independent equity research and data firm in Toronto) gives greater alignment of the company’s product offerings with the business practices of advisors, says Scott Mackenzie, president and CEO of Morningstar Research.

For example, he says the Andex charts are widely used by institutions and are increasingly seeing uptake among individual wealth managers and investment counsellors. Andex provides individual graphic charts detailing historical market returns, stock index growth, inflation rates, currency rates and general economic conditions for the United States dating back to 1926 and for Canada dating back to 1950.

The charts offer in-depth historical information to help investors understand the context and propensity of market downturns and recoveries. Andex serves many of the large financial services firms in Canada, including BMO Financial Group, CIBC, Great-WestLife, Investors Group, London Life, RBC Royal Bank, Scotiabank and TD Canada Trust.

“[Andex charts] are used a lot by financial advisors and institutions to communicate historical market returns, and [the charts] are interlaced with political and economic events in a very succinct fashion about how various markets have performed over the long term, which is of particular value for financial advisor techniques,” Mackenzie told “This becomes a huge communication opportunity for financial advisors. We saw that as a natural fit for Morningstar if for no other reason than we pride ourselves on our ability to take complex or arcane concepts and turn them into very digestible material [that] the individual investor can make use of.”

The recent acquisition of CPMS, which tracks fundamental equity data for approximately 4,000 securities in the United States and Canada and provides brokerage earnings estimates for Canadian equities, responds to a growing demand for independent equity research by securities licensed advisors.

Morningstar already has significant resources in equities research that it can access from its parent company. CPMS offers a fundamental data tool that advisors and investors could access independently.

“We actually have employed, on a worldwide basis, more equity analysts than we do mutual fund analysts. We do quite an extensive coverage, and we cover a good portion of the Canadian market as well. We already sell qualitative equity research data,” Mackenzie said. “The CPMS is very data-driven, very clean and unusually high-quality fundamental data on stocks. The nice thing is, an advisor can actually create their own models or use some of our models built into the system to help them search through the various stocks out there to see which match your models.”

Ideally, Mackenzie would like to see the CPMS data being used alongside the company’s popular PALtrak software.

“The high-net-worth advisor has been the fastest growing segment of the CPMS business. That’s an area where we think, as an organization that’s biggest constituency is the advisor, we can really help out with,” Mackenzie says. “The basic idea is that an advisor could have our PALtrak on one side [showing fund data] and CPMS on the other, creating sort of a best-in-class tools for not only fund research but also individual stock research.”


Mark Noble