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.