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Financial Services: Interest-Rate Expectations Have Pressured Performance

Michael Wong, CFA, CPA (michael.wong@morningstar.com)

The Morningstar Global Financial Services Index has underperformed the Morningstar Global Markets Index over the previous year (negative 7% compared with 1%) and has underperformed in the previous three months (8% compared with 11%). Currently, we see the most value in the banking industry, with around half of our banking coverage trading at 5 or 4 stars. There's 10% upside to the median price/fair value estimate of our asset management coverage after our coverage appreciated 11% in the previous three months.