Bond Investors Are Paying Up Again for Active Fund Managers
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 11 2024
0mins
Source: WSJ
- American savers turning to Wall Street pros: Due to a rocky stretch in debt markets, American savers are seeking help from professionals on Wall Street to choose their bonds.
- Increase in actively managed fixed-income funds: $105 billion has flowed into actively managed fixed-income funds this year, surpassing the $74 billion that went into funds tracking an index.
- First time flows into active bond funds surpassed passive funds: This marks the first time since 2021 that flows into active bond funds have exceeded those into passive funds.
- Data source: The information is based on Morningstar Direct data as of April 30.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MORN?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MORN
Wall Street analysts forecast MORN stock price to rise
2 Analyst Rating
2 Buy
0 Hold
0 Sell
Moderate Buy
Current: 177.740
Low
250.00
Averages
285.00
High
320.00
Current: 177.740
Low
250.00
Averages
285.00
High
320.00
About MORN
Morningstar, Inc. is a provider of independent investment insights. The Company's segments include Morningstar Direct Platform, PitchBook, Morningstar Credit, Morningstar Wealth, and Morningstar Retirement. The Morningstar Direct Platform provides investors with data, research and insights, and investment analysis to empower investment decision-making. The PitchBook provides investors with access to data, research, analytics, and artificial intelligence (AI) enabled software across private capital markets, including venture capital, private equity, private credit, bank loans, and mergers & acquisitions (M&A). Morningstar Credit provides investors with credit ratings, research, data, and credit analytics solutions. Morningstar Wealth provides investment products, investor tools, and an advisor platform powered by research and data. The Morningstar Retirement offers products designed to help individuals reach retirement goals.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Nvidia Continues to Exceed Expectations with Record Growth
- Record Revenue: Nvidia reported a record revenue of $81.6 billion for fiscal Q1 2027, representing an 85% year-over-year increase and marking 14 consecutive quarters of revenue growth, highlighting its robust performance and sustained demand in the AI sector.
- Surge in Data Center Revenue: Data center revenue, which now constitutes the bulk of Nvidia's earnings, rose 92% year-over-year to $75.2 billion, indicating the company's leadership in cloud computing and AI infrastructure, further solidifying its market share.
- High Profit Margins Maintained: Nvidia's recent gross margin of 74.9% demonstrates its ability to maintain efficient cost control and profitability while experiencing rapid growth, enhancing investor confidence in its future prospects.
- Analysts Remain Bullish: Despite market skepticism regarding Nvidia's market cap, 52 out of 54 analysts rate the stock as a buy, with an average price target of $299, indicating a potential 35% upside from current levels and reflecting optimism about its future performance.
See More
Nvidia's Strong Growth Persists Amid Overvaluation Claims
- Significant Revenue Growth: Nvidia's latest earnings report reveals a record revenue of $81.6 billion for Q1 2027, marking an 85% year-over-year increase and achieving 14 consecutive quarters of revenue growth, showcasing its robust performance in the AI sector.
- Surge in Data Center Revenue: Data center revenue, which constitutes the bulk of Nvidia's earnings, soared by 92% year-over-year to $75.2 billion, further solidifying its leadership position in the high-margin market.
- Relatively Reasonable Valuation: Despite Nvidia's market cap exceeding $5 trillion, its forward P/E ratio stands at 25 times, significantly lower than AMD's 61 times and Broadcom's 37 times, indicating investment attractiveness amid strong profitability.
- Analysts Remain Bullish: Among the 54 analysts covering Nvidia, 52 have rated it a buy, with an average price target of $299, suggesting a 35% upside from the current stock price, reflecting market confidence in its future growth.
See More
Wall Street Weekly Outlook: European Investment Opportunities
- European Stock Potential: Michael Field, Chief Equity Strategist at Morningstar, sees a potential upside of about 5% in European stocks, with defensive sectors still attracting investment despite recent pressures, while consumer discretionary stocks are trading at a 20% to 25% discount to fair value estimates.
- Healthcare Discounts: Field notes that the healthcare sector also presents significant discounts, and some European tech companies are relatively attractive at the moment; the recent dollar weakness has inadvertently benefited European firms, providing good opportunities for U.S. investors seeking diversification.
- Defense Spending Trend: David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory, believes that European defense spending will become a mega trend over the next 10 to 15 years, as NATO leaders emphasize the industry's capacity shortfalls, presenting medium-term investment opportunities.
- Emerging Market Optimism: Andrew Heiskell, Equity Strategist at Wellington Management, expresses increasing bullishness on emerging market equities following a sharp improvement in fundamental performance, suggesting that investor exposure has been underweight, but he is optimistic about future prospects as capital is poised to return to these markets.
See More
Morningstar Launches Corporate Credit Analytics Tools
- Tool Launch: Morningstar's Credit Analytics subsidiary has introduced Corporate Credit Analytics tools aimed at enhancing transparency and consistency in private credit analysis by integrating private company data, thereby enabling credit teams to establish a more data-driven framework for evaluating borrower performance.
- Market Demand: According to PitchBook's report, private credit assets have surpassed $2.5 trillion, yet the market remains opaque; Morningstar's new tools aim to address this gap, meeting the urgent needs of institutional investors and regulators for improved risk measurement and communication.
- Data Integration: The new platform consolidates financial statements, loan-level data, and credit risk scoring tools, providing approximately 80 key financial metrics that help users achieve greater accuracy and consistency in borrower assessments, thus enhancing the effectiveness of investment decisions.
- Target Audience: Designed for institutional users including direct lenders, portfolio managers, and credit teams, the tools aim to accelerate investment processes and ensure consistency across investment committees and regulators, further promoting the healthy development of the private credit market.
See More
Analysis of Summer Volatility on Wall Street
- Market Volatility Factors: While summer is typically seen as a low-volatility period, the implementation of the 2025 Liberation Day tariffs and the Fed's rate hikes in 2022 highlight that stocks can face risks at any time, especially amid rising inflation and ongoing geopolitical tensions like the Iran war.
- ETF Investment Strategy: In the current market environment, dividend-focused exchange-traded funds (ETFs) such as the Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Dividend Appreciation ETF (VIG) offer investors a more conservative option, reducing risk and providing better downside protection.
- Schwab ETF Performance: The Schwab U.S. Dividend Equity ETF has shown a strong comeback in 2026, with a year-to-date return of 16% due to capital flowing into value and low-volatility stocks, making it one of the best-performing dividend ETFs in the market and underscoring its significance in investment portfolios.
- Vanguard ETF Characteristics: The Vanguard Dividend Appreciation ETF targets large-cap stocks with over ten years of dividend growth, including tech giants like Broadcom, Apple, and Microsoft, which helps maintain high performance potential, making it suitable for investors looking to sustain returns amid market volatility.
See More
Rising Oil Prices Heighten Economic Slowdown Risks
- Increased Economic Slowdown Risk: The significant rise in oil prices and inflation has heightened the risk of an economic slowdown later this year, prompting investors to reassess their portfolios to mitigate potential market volatility.
- Market Volatility Expectations: Despite summer typically being viewed as a low-volatility period, the ongoing Iran conflict and potential interest rate hikes create uncertainty, leading investors to consider reallocating some capital into dividend ETFs for risk reduction.
- Strong Performance of Dividend ETFs: For instance, the Schwab U.S. Dividend Equity ETF has shown a robust comeback in 2026, achieving a 16% year-to-date return, significantly outperforming the Vanguard S&P 500 ETF, highlighting its appeal in the value and low-volatility stock sectors.
- Diversified Investment Strategies: The three dividend ETFs each focus on different strategies—high yield, dividend growth, and multifactor—providing investors with low volatility and high-quality investment options, making them suitable for use in times of increasing market risks.
See More
Nvidia Continues to Exceed Expectations with Record Growth
- Record Revenue: Nvidia reported a record revenue of $81.6 billion for fiscal Q1 2027, representing an 85% year-over-year increase and marking 14 consecutive quarters of revenue growth, highlighting its robust performance and sustained demand in the AI sector.
- Surge in Data Center Revenue: Data center revenue, which now constitutes the bulk of Nvidia's earnings, rose 92% year-over-year to $75.2 billion, indicating the company's leadership in cloud computing and AI infrastructure, further solidifying its market share.
- High Profit Margins Maintained: Nvidia's recent gross margin of 74.9% demonstrates its ability to maintain efficient cost control and profitability while experiencing rapid growth, enhancing investor confidence in its future prospects.
- Analysts Remain Bullish: Despite market skepticism regarding Nvidia's market cap, 52 out of 54 analysts rate the stock as a buy, with an average price target of $299, indicating a potential 35% upside from current levels and reflecting optimism about its future performance.
See More
Nvidia's Strong Growth Persists Amid Overvaluation Claims
- Significant Revenue Growth: Nvidia's latest earnings report reveals a record revenue of $81.6 billion for Q1 2027, marking an 85% year-over-year increase and achieving 14 consecutive quarters of revenue growth, showcasing its robust performance in the AI sector.
- Surge in Data Center Revenue: Data center revenue, which constitutes the bulk of Nvidia's earnings, soared by 92% year-over-year to $75.2 billion, further solidifying its leadership position in the high-margin market.
- Relatively Reasonable Valuation: Despite Nvidia's market cap exceeding $5 trillion, its forward P/E ratio stands at 25 times, significantly lower than AMD's 61 times and Broadcom's 37 times, indicating investment attractiveness amid strong profitability.
- Analysts Remain Bullish: Among the 54 analysts covering Nvidia, 52 have rated it a buy, with an average price target of $299, suggesting a 35% upside from the current stock price, reflecting market confidence in its future growth.
See More
Wall Street Weekly Outlook: European Investment Opportunities
- European Stock Potential: Michael Field, Chief Equity Strategist at Morningstar, sees a potential upside of about 5% in European stocks, with defensive sectors still attracting investment despite recent pressures, while consumer discretionary stocks are trading at a 20% to 25% discount to fair value estimates.
- Healthcare Discounts: Field notes that the healthcare sector also presents significant discounts, and some European tech companies are relatively attractive at the moment; the recent dollar weakness has inadvertently benefited European firms, providing good opportunities for U.S. investors seeking diversification.
- Defense Spending Trend: David Stubbs, Chief Investment Strategist at AlphaCore Wealth Advisory, believes that European defense spending will become a mega trend over the next 10 to 15 years, as NATO leaders emphasize the industry's capacity shortfalls, presenting medium-term investment opportunities.
- Emerging Market Optimism: Andrew Heiskell, Equity Strategist at Wellington Management, expresses increasing bullishness on emerging market equities following a sharp improvement in fundamental performance, suggesting that investor exposure has been underweight, but he is optimistic about future prospects as capital is poised to return to these markets.
See More
Morningstar Launches Corporate Credit Analytics Tools
- Tool Launch: Morningstar's Credit Analytics subsidiary has introduced Corporate Credit Analytics tools aimed at enhancing transparency and consistency in private credit analysis by integrating private company data, thereby enabling credit teams to establish a more data-driven framework for evaluating borrower performance.
- Market Demand: According to PitchBook's report, private credit assets have surpassed $2.5 trillion, yet the market remains opaque; Morningstar's new tools aim to address this gap, meeting the urgent needs of institutional investors and regulators for improved risk measurement and communication.
- Data Integration: The new platform consolidates financial statements, loan-level data, and credit risk scoring tools, providing approximately 80 key financial metrics that help users achieve greater accuracy and consistency in borrower assessments, thus enhancing the effectiveness of investment decisions.
- Target Audience: Designed for institutional users including direct lenders, portfolio managers, and credit teams, the tools aim to accelerate investment processes and ensure consistency across investment committees and regulators, further promoting the healthy development of the private credit market.
See More
Analysis of Summer Volatility on Wall Street
- Market Volatility Factors: While summer is typically seen as a low-volatility period, the implementation of the 2025 Liberation Day tariffs and the Fed's rate hikes in 2022 highlight that stocks can face risks at any time, especially amid rising inflation and ongoing geopolitical tensions like the Iran war.
- ETF Investment Strategy: In the current market environment, dividend-focused exchange-traded funds (ETFs) such as the Schwab U.S. Dividend Equity ETF (SCHD) and Vanguard Dividend Appreciation ETF (VIG) offer investors a more conservative option, reducing risk and providing better downside protection.
- Schwab ETF Performance: The Schwab U.S. Dividend Equity ETF has shown a strong comeback in 2026, with a year-to-date return of 16% due to capital flowing into value and low-volatility stocks, making it one of the best-performing dividend ETFs in the market and underscoring its significance in investment portfolios.
- Vanguard ETF Characteristics: The Vanguard Dividend Appreciation ETF targets large-cap stocks with over ten years of dividend growth, including tech giants like Broadcom, Apple, and Microsoft, which helps maintain high performance potential, making it suitable for investors looking to sustain returns amid market volatility.
See More
Rising Oil Prices Heighten Economic Slowdown Risks
- Increased Economic Slowdown Risk: The significant rise in oil prices and inflation has heightened the risk of an economic slowdown later this year, prompting investors to reassess their portfolios to mitigate potential market volatility.
- Market Volatility Expectations: Despite summer typically being viewed as a low-volatility period, the ongoing Iran conflict and potential interest rate hikes create uncertainty, leading investors to consider reallocating some capital into dividend ETFs for risk reduction.
- Strong Performance of Dividend ETFs: For instance, the Schwab U.S. Dividend Equity ETF has shown a robust comeback in 2026, achieving a 16% year-to-date return, significantly outperforming the Vanguard S&P 500 ETF, highlighting its appeal in the value and low-volatility stock sectors.
- Diversified Investment Strategies: The three dividend ETFs each focus on different strategies—high yield, dividend growth, and multifactor—providing investors with low volatility and high-quality investment options, making them suitable for use in times of increasing market risks.
See More
