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Mutual fund investment data tracker Morningstar Inc. has introduced a managed portfolio program for financial advisors, a departure from its usual business of evaluating fund performance.
The Chicago-based company recently set up a new registered investment advisory subsidiary, Morningstar Investment Services Inc., which is to launch a managed group of fund portfolio programs in the fourth quarter.
Morningstar will offer the service to financial planners, regional broker-dealers, bank-affiliated advisors, insurance agents and CPAs. It will package funds in different investment plans that advisors can then offer their clients.
Mutual fund wrap programs like Morningstars Managed Portfolios allocate investors assets periodically among a broad choice of funds.
Similar programs are offered by such financial advisors as FundQuest Inc., Boston; SEI Investments Co., Oak, Pa.; AssetMark Investment Services, Pleasant Hill, Calif.; and Brinker Capital, King of Prussia, Pa.
Morningstar has not made a final decision on its fees for the service, but they would probably range from 15 to 35 basis points of advisors income from each account, depending on asset size, estimates Tom Florence, managing director for Morningstar. Florence will serve as president of Morningstar Investment Services.
The wrap program product, to be called Morningstar Managed Portfolios, will aim at advisors who have strong client-management relations and investment-planning backgrounds, says Florence.
Initially, Morningstar Managed Portfolios will feature mutual fund portfolios researched, engineered, and monitored by Morningstar Investment Services, as well as back-office operations and support services, he explains.
The service will provide client account-management capabilities and marketing and sales support through a Web site. Next year, Morningstar plans to add separate accounts managed by leading investment management firms to allow investment advisors to create portfolios using mutual funds and separate accounts.
Managed account products such as Morningstars are rapidly growing, says Paul Fullerton, an analyst with the Boston research firm Cerulli Associates.
"There used to be just a select few firms in the business," he says.
