Morningstar has confirmed it will launch analyst ratings for exchange-traded funds as it looks to make it easier for investors to compare investments across different fund types.
The research provider today (9 September) announced it will roll-out ratings for around 300 ETFs, of which 100 will be domiciled in Europe.
This offering is expected to expand to cover a wider range of ETFs over time.
Analysts assess funds using five key elements: process, performance, people, parent, and price, and categorise them using a five-tier system.
Morningstar’s announcement comes just days after FTSE 100 wealth manager Hargreaves Lansdown said it had added 13 tracker funds to its recommended product list, Wealth 150 Plus, for the first time.
Hortense Bioy, Morningstar’s director of European passive funds research, said: “With ETFs increasingly used strategically to build investment portfolios and the range of ETF options continuing to grow, investors need help to make informed decisions.”
Morningstar has been providing research and analyst reports on some 650 ETFs worldwide for more than eight years, and launched ratings for index funds in the UK back in 2013.
Ms Bioy said this new offering was a “natural extension” of this research, and intends to further support investors in their due diligence efforts.
Morningstar has approximately 115 manager research analysts worldwide who cover about 4,000 funds.
Ms Bioy also said Morningstar will remove the commission or sales charge rating because fewer investors are paying commissions or sales charges.
She said: “When we established the Morningstar rating methodology, these charges were much more common and we saw a need to highlight the cost for investors.
“With this change, we’re focused on both fairly evaluating the industry’s past, as well as helping investors effectively navigate the future.”
katherine.denham@ft.com
