Investment research provider Morningstar has rolled out new indices designed to follow the stock picks of top investment managers.
“In April 2009, Morningstar equity analysts began to research the quarterly holdings, purchases, and sales of 26 top investment managers, or what Morningstar calls the ‘Ultimate Stock-Pickers.’ The Morningstar Ultimate Stock-Pickers Index takes this concept to the next level by combining the picks of these top managers with Morningstar’s independent equity research,” the company said in a press release.
BNP Paribas has licensed the benchmarks to serve as indices for three new structured bank notes expected to launch in early April.
“The Morningstar Index team first compiles a list of fund holdings from the managers selected by Morningstar’s research team and then pares the list down by excluding securities that Morningstar equity analysts believe are overvalued or inherently difficult to predict,” Morningstar said.
“Next, the index team examines how many of the well-regarded managers hold the security, how much of it they hold, and whether or not managers have been adding to the position to determine a fund manager conviction score,” the firm added. “Securities with the highest manager conviction scores comprise the Morningstar Ultimate Stock-Pickers Index.”
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