Morningstar Adds New Categories
Morningstar is rolling out 11 new categories and eliminating one this month. The Chicago-based fund rating service says the new categories will make it easier for investors to find the fund they‚re looking for and identify the most skilled managers more quickly.
Morningstar decided to split its domestic hybrid category because it had become too broad. In recent years, fund companies have gotten much more specific about targeting various asset mixes. Morningstar notes Vanguard alone has nine different funds in the domestic-hybrid category and the group itself has grown to 398 funds, making it the third-largest category. As a result of the split, funds with 20% to 50% in equities and 50% or more in fixed income will be classified as conservative allocation. Funds with more than 50% in equities will be labeled moderate allocation.
Morningstar also is creating six new state-specific municipal-bond fund categories covering Florida, Pennsylvania, Massachusetts, New Jersey, Ohio and Minnesota. The new categories should make it easier for investors to find the funds they want and compare performance, Morningstar says.
The company also is introducing these categories:
• Muni High-Yield. It will include any fund with a majority of assets in BBB-rated bonds or lower. The new category allows investors to make better comparisons of high-yield muni managers.
• Bank-Loan Funds. It‚s for funds that have a majority of their assets in floating-rate bank loans. These funds are growing in popularity, but much riskier than the ultrashort-bond funds with which they had been lumped.
• Bear-Market Funds. Although the category doesn‚t yet have 20 funds, Morningstar decided to create it because funds such as these use short-selling techniques and don‚t fit in current categories. The funds won‚t get star ratings because they vary too much in their portfolio characteristics and risk-reward profiles.
The firm also is changing requirements in some existing categories. For more information, visit advisor.morningstar.com.
Lockwood Rolls Out Products
Malvern, Pa.-based Lockwood Advisors Inc. is planning an 18-city tour to promote new products and its service platform for independent financial advisors.
The company, recently purchased by The Bank of New York Company Inc., is introducing a mutual fund wrap product, registered no-load hedge funds, an overlay management product, a mortgage origination capability, a mutual fund supermarket, an on-line trading platform, a passive municipal fixed-income product and collateralized lending services.