Morningstar chief executive Kunal Kapoor has spent his working life at the company, which prides itself on being an innovator and an independent voice for ordinary people trying to analyze investments.

Share story

CHICAGO — In the last few years, it’s become less common for a person to enter a company right out of college, learn the business from the inside and ultimately rise to the top position. But Morningstar’s new chief executive, Kunal Kapoor, bucked the changing trend.

He is the hometown boy at Chicago-based Morningstar. At age 41, he’s spent 20 years at the nearly 33-year-old company that was a pioneer in democratizing investing for regular people.

Founded by Joseph Mansueto in 1984, Morningstar taught do-it-yourself investors and advisers how to invest and how to pick solid mutual funds and later stocks, exchange-traded funds and other investments successfully.

Kunal Kapoor, CEO of Morningstar

Age: 41

Education: B.A. in economics and environmental policy, Monmouth College; MBA, University of Chicago

Career: Joined Morningstar in 1997 as a data analyst; later served as director of mutual-fund research and then president and chief investment officer of Morningstar Investment Services.

Other affiliations: Was a board member at Seattle-based PitchBook before it was sold to Morningstar last year; board member at Nature Conservancy.

Chicago Tribune, Morningstar

Kapoor, who considers Mansueto his mentor, joined Morningstar as a data analyst and earned his MBA from the University of Chicago while working at the company. He moved into numerous operational roles as the company grew to more than 4,000 employees with business in 27 countries and nearly $800 million in 2016 revenue. Kapoor became the chief executive in January as Mansueto, 60, left that position and became executive chairman.

Kapoor said he never had his eye on the executive suite. He simply enjoyed the job and Morningstar’s unique culture as an innovator and independent voice for investors trying to analyze investments.

“It’s never been a desire to absolutely have a particular position,” he said. “As long as I’m having fun and growing professionally, I’m satisfied.” The interview was edited for length and clarity.

 

Q: How are you like Joe?

A: We are similar in many ways. We are both patient and long-term investors and business builders. We don’t get stressed out a lot. We both have contrarian lenses, are approachable, and have a deep-seated interest in helping the individual investor.

 

Q: How are you different?

A: We were asked that at the Morningstar town hall and we both struggled. Joe joked that I was born in India and he was born in Indiana.

 

Q: Tell me what you value about the Morningstar culture.

A: It’s founded on the notion of helping the individual investors and doing things the right way. Everything we do is in an independent fashion. We’ve never had a problem speaking out against a bad investment idea and that’s a big deal. The analysts here have no problem saying what’s on their minds. We protect that.

 

Q: So say a Morningstar analyst writes about a mutual fund, warns people that it’s being poorly managed, and the star rating is poor. What happens when fund company executives are angry?

A: Our analysts are free to opine and the businesspeople are not involved.

 

Q: So they can’t complain to you?

A: They often do complain to me, but I can’t do anything about it. I ask them to talk to the analyst, and I explain why it’s important to respect the walls we have. I think most people understand that’s the value of working with Morningstar — our independent analysis.

 

Q: That was unique when Morningstar was formed 30 years ago. Most analysis was done by Wall Street firms that didn’t want to offend their investment banking clients with a “sell rating” on a stock. Not only was Morningstar an independent firm, it was known for giving contrarian advice.

A: We have always taken a contrarian view. And sometimes the contrarian view means we recommend sticking with managers at the worst times — when their fund has not done well — if we like their approach. We often recommend stocks that have fallen in price. During the worst times stocks are the cheapest. We had the highest number of five-star stocks during the last downturn. … Today if you look at our ratings we just have a handful of stocks rated five stars.

 

Q: So your analysts aren’t seeing good deals on stocks now?

A: You want to pay a fair price when investing. I always use an analogy: Everyone loves a good sale. If they see a jacket on sale they buy it because they notice it’s 50 percent cheaper than the last time they looked at it. Yet most investors have the opposite reaction.

 

Q: Morningstar has worked hard on Morningstar.com and your fund and stock newsletters to turn that thinking around.

A: I think we have more work to do. The majority don’t love investing or understand it fully, and often when they do invest it’s at the worst times. They tend to buy high and sell low and it’s our job to continue to educate and expand our footprint to help those folks.

 

Q: You started at Morningstar analyzing data and mutual funds. Where did your interest in investing come from?

A: As a child, I was interested in the stock market and numbers in general. My dad was always interested in the stock market and it was probably his interest.

 

Q: Did he sit you down and teach you about stocks?

A: No, but he encouraged it. I can remember as a young kid deciding I needed him to buy some stocks and he humored me and bought them and I have no idea why. They didn’t turn out very well, but it fed an interest.

 

Q: Are you teaching your three children?

A: I try; at least the older two, who are 11 and 9. I’ve purchased stocks for them and they have something to say (about) it. Much to my chagrin they like to buy things that have gone up quite a lot.

 

Q: You mentioned earlier that you value having fun in your career. What do you do for fun in your personal life?

A: I have a young family, so that keeps me quite busy, but I like running early in the morning and family vacations that are a little different. We went to the Galápagos Islands last year, and we’re going to the Amazon this year. I have a keen interest in nature and environment and work on the Nature Conservancy board.