Morningstar Investment Services-the investment management arm of Morningstar Inc.-has launched a new separately managed account offering aimed at the independent advisor market.
   Morningstar Portfolio Select Stock Baskets, offered exclusively through advisors, uses Morningstar's proprietary research to tailor customized stock baskets for clients with minimum accounts of $500,000.
   The service is an expansion of Morningstar Managed Portfolios, which since 2002 has offered advisors mutual fund and ETF investment strategies based on Morningstar research. The managed portfolios offering had about $1.6 billion under management at the end of the third quarter 2006.
   The new SMA offering extends Morningstar Investment Services active management to individual stocks, which are weighted in individual stock baskets based on Morningstar ratings and a client's risk profile and investment goals.
   "We've designed the service for financial advisors who have clients with tax sensitive and sophisticated investing needs," says Art Lutschaunig, president and chief investment officer of Morningstar Investment Services.
   The program is backed by Morningstar research that covers a universe of about 1,900 common stocks, he adds. That allows the SMA offering to individually rate all large- and mid-cap stocks used in the stock baskets, Lutschaunig says. Small cap investments are handled through ETFs.
   He adds that the SMA offering is aimed at investors with at least a five-year horizon in the "moderate to aggressive growth camp."
   Portfolio Select Stock Baskets charges an investment management and research fee of 65 basis points for the first $1 million invested, 60 basis points for the second $1 million, and 50 basis points thereafter, Lutschaunig says. The administration fee is 8 basis points for the first $1 million and 5 basis points thereafter.
   Those are in addition to the fees a client would pay his or her independent advisor and the trading fees generated by the account.