CHICAGO, May 9, 2011 /PRNewswire/ -- Morningstar, Inc.
(NASDAQ: MORN), a leading provider of independent investment
research, has added 10 new alternative investment categories within
the Morningstar Category classification system—eight for ETFs and
two for the broad universe of funds, including U.S. open-end mutual
funds, ETFs, variable annuity subaccounts, separate accounts,
collective investment trusts, and insurance group separate
accounts. The company has also renamed the Long/Short category
Long/Short Equity and relocated long/short funds without a
predominant equity exposure to the most appropriate new alternative
categories.
"We're adding these new categories because of the growing number
and heightened usage of alternative funds. It's clear that
alternative funds are here to stay. More than 400 alternative
mutual funds and ETFs launched in the last five years, including
more than 100 last year alone. And investors poured almost
$38 billion into these funds in
2010," said John Rekenthaler, vice
president of research for Morningstar.
The new alternative categories for the broad universe of funds
are:
- Managed Futures: These funds typically take long and short
positions in futures or other derivative contracts according to a
trend-following or momentum strategy.
- Multialternative: These funds offer investors exposure to a
combination of strategies like long-short equity and debt, managed
futures, global macro, and convertible arbitrage, among
others.
The new alternative categories for ETFs are:
- Volatility: These funds trade volatility as an asset class and
aim to profit from turbulence in the financial markets.
- Trading—Leveraged Commodities: These funds seek to generate a
daily or weekly return that is a certain number of times larger
than the return of the reference commodity index.
- Trading—Inverse Commodities: These funds seek to generate a
daily or weekly return that is a certain number of times larger
than the reference commodity index but in the inverse, or opposite,
direction.
- Trading—Leveraged Debt: These funds seek to generate a daily or
weekly return that is a certain number of times larger than the
return of the reference fixed-income index.
- Trading—Inverse Debt: These funds seek to generate a daily or
weekly return that is a certain number of times larger than the
reference fixed-income index but in the inverse, or opposite,
direction.
- Trading—Leveraged Equity: These funds seek to generate a daily
or weekly return that is a certain number of times larger than the
return of the reference equity index.
- Trading—Inverse Equity: These funds seek to generate a daily or
weekly return that is a certain number of times larger than the
reference equity index but in the inverse, or opposite,
direction.
- Trading—Miscellaneous: These funds seek to generate a daily or
weekly return that is a certain number of times larger than the
short-term returns of an index in either a positive or negative
direction.
Funds populating these new categories come primarily from
Morningstar's existing alternative categories, including
Long/Short, Market Neutral, Bear Market, and Currency. Funds in the
seven Trading categories will not receive a Morningstar Rating,
because they are primarily designed as short-term holdings.
The new category assignments are available in Morningstar's
Web-based products today, and Morningstar expects to roll them out
in all Morningstar products in the second quarter. Morningstar has
calculated historical averages for the new categories as well as
recalculated historical averages for categories with reassigned
funds. The Morningstar Category™ Classifications methodology is
available at
http://corporate.morningstar.com/CategoryClassifications.
The Morningstar Category classifications were introduced in 1996
to classify funds based on how they actually invest. Rather than
assign a category to a fund based on the objective stated in its
prospectus, Morningstar analyzes the fund's underlying holdings.
Funds are placed in a given category based on their average
portfolio statistics during the past three years.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment research in North
America, Europe,
Australia, and Asia. The company offers an extensive line of
Internet, software, and print-based products and services for
individuals, financial advisors, and institutions. Morningstar
provides data on approximately 380,000 investment offerings,
including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 5 million equities,
indexes, futures, options, commodities, and precious metals, in
addition to foreign exchange and Treasury markets. Morningstar also
offers investment management services and has approximately
$139 billion in assets under
advisement and management as of March 31,
2010. The company has operations in 26 countries.
©2011 Morningstar Inc. All rights reserved.
Media Contact:
Alexa Auerbach 312-696-6481,
alexa.auerbach@morningstar.com
SOURCE Morningstar, Inc.