In a nod to the proliferation of exotic fund options, Morningstar, Inc. this week added two new fund categories and one broad asset class to its mutual funds classification system.
The Chicago-based investment research company added a global real estate category for funds focused on real estate securities, convertible securities and real estate investment trusts where at least 40% of the holdings are in non-U.S. securities. As of June 30, there were 45 mutual funds and 11 exchange-traded funds in this category, which is part of the overall asset class of international stocks funds.
The second new category--currency--comprises eight mutual funds and 26 ETFs that invest in U.S. and foreign currencies via short-term money market instruments; derivative instruments--including but not limited to--forward currency contracts; index swaps and options; and cash deposits.
And in addition to its existing five broad asset classes--U.S. stock, international stock, taxable bond, municipal bond, and balanced--Morningstar added an "alternative" class that includes the currency, long-short, precious metals, and bear market categories.
Morningstar also eliminated the muni Florida category in the municipal bond asset class because many of the funds in this category were liquidated or have merged with other funds. The remaining funds in that category will be included in one of the muni single state categories (long, intermediate, or short). The funds' new assignment will be based on a three-year average of duration and maturity statistics.