To better classify alternative investments, Morningstar has added 10 new alternative investment categories within the Morningstar Category classification system, the Chicago-based investment research firm announced Monday.

Eight of the categories cover exchange traded funds and two cover the broad universe of funds, including U.S. open-end mutual funds, ETFs, variable annuity subaccounts, separate accounts, collective investment trusts and insurance group separate accounts.

The company has also renamed the Long/Short category as Long/Short Equity, and has relocated long/short funds without a predominant equity exposure to the most appropriate new alternative categories.

“We’re adding these new categories because of the growing number and heightened usage of alternative funds,” said John Rekenthaler, vice president of research for Morningstar, in a statement. “It’s clear that alternative funds are here to stay.”

More than 400 alternative mutual funds and ETFs have launched in the last five years, including more than 100 last year, according to Rekenthaler. Investors poured almost $38 billion into these funds in 2010, he said.

The new category assignments are currently available in Morningstar’s Web-based products, and Morningstar expects to roll them out in all Morningstar products in the second quarter. Morningstar has calculated historical averages for the new categories as well as recalculated historical averages for categories with reassigned funds.

For the broad universe of funds, the new alternative categories are:

Managed Futures: These funds typically take long and short positions in futures or other derivative contracts according to a trend-following or momentum strategy.
Multi-alternative: These funds offer investors exposure to a combination of strategies such as long-short equity and debt, managed futures, global macro and convertible arbitrage, among others.

For ETFs, the new alternative categories are:

Volatility: These funds trade volatility as an asset class and aim to profit from turbulence in the financial markets.
Trading—Leveraged Commodities: These funds seek to generate a daily or weekly return that is a certain number of times larger than the return of the reference commodity index.
Trading—Inverse Commodities: These funds seek to generate a daily or weekly return that is a certain number of times larger than the reference commodity index but in the inverse, or opposite, direction.
Trading—Leveraged Debt: These funds seek to generate a daily or weekly return that is a certain number of times larger than the return of the reference fixed-income index.
Trading—Inverse Debt: These funds seek to generate a daily or weekly return that is a certain number of times larger than the reference fixed-income index but in the inverse, or opposite, direction.
Trading—Leveraged Equity: These funds seek to generate a daily or weekly return that is a certain number of times larger than the return of the reference equity index.
Trading—Inverse Equity: These funds seek to generate a daily or weekly return that is a certain number of times larger than the reference equity index but in the inverse, or opposite, direction.
Trading—Miscellaneous: These funds seek to generate a daily or weekly return that is a certain number of times larger than the short-term returns of an index in either a positive or negative direction.

Funds populating these new categories come primarily from Morningstar's existing alternative categories, including Long/Short, Market Neutral, Bear Market and Currency. Funds in the seven Trading categories will not receive a Morningstar rating because they are primarily designed as short-term holdings.