Morningstar is receiving criticism for voicing a negative bias towards exchange traded funds (ETFs). The firm is best known for its ratings and analysis of mutual funds and fund companies license the use of Morningstar’s ratings for shareholder communications. The company does not provide information on the breakdown of contributions of ETFs vs. funds. Morningstar denies it has a negative ETF bias, but there is anecdotal evidence to support the claim, which is gaining greater currency among industry observers, writes Jen Ryan in The Street.com. ETFs are growing rapidly and may begin to take a share from mutual funds and ultimately, that would pose a threat to any company tied to rating or issuing mutual funds. As of now, this is only a theory observed about Morningstar.
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