Alternative investments and exchange traded funds have attracted a greater following as investors seek to diversify and hedge against the recent bouts of market volatility. In an attempt to better serve investors, Morningstar has launched Thursday the Morningstar Analyst Rating and Global Fund Reports for alternative U.S. mutual funds.
According to a press release, the new analyst rating and fund reports for U.S. alternative funds will cover 75% of the alts universe by assets and the reports should cover 100 funds over the next year.
Currently, Morningstar analysts have rated 40 alternative U.S. mutual funds, providing a rating of “Gold” to one alternative mutual fund, a “Silver” rating to nine funds, a “Bronze” rating to seven funds, a “Neutral” rating to 17 funds, and a “Negative” rating to six funds.
The five-tiered scale has three positive levels – Gold, Silver and Bronze, along with the Neutral and Negative rating. Morningstar tallies both numeric and qualitative factors, such as People, Process Parent, Performance and Price, to determine a fund’s rating.
“The strategies employed in alternative funds are often new and sometimes complex. Our goal with the Analyst Ratings and Global Fund Reports for these alternative investments is to help institutions and financial advisors research and compare funds as they continue to seek diversification through alternative investments,” Nadia Papagiannis, director of Morningstar’s alternative fund research and editor of Alternative Investments Observer, said in the press release.
“Our recent survey about the perception and usage of alternative investments found that financial advisors and institutions continue to value alternatives,” Papagiannis added. “While inflows to equity-based alternative mutual funds have slowed, investors continue to flock to non-equity-based funds, such as managed futures mutual funds.”
For more information on different assets, visit our asset class ETFs category.
On June 27, we are hosting an Alternative Investments Virtual Summit, which will help provide advisors with industry guidance on how alternative assets fit into an investment portfolio. The virtual conference will bring the conference experience to you at your own office, home or anywhere with Internet access as it is a virtual online experience.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.