Morningstar said Thursday that in order to help investors and advisors more easily compare various types of funds, the Chicago-based research firm plans to apply its forward-looking Morningstar Analyst Rating to 300 exchange-traded funds globally, and is “collapsing” open-end mutual funds as well as ETFs into the fund research firm’s star rating.
The “distinction between ETFs, mutual funds and other types of funds is becoming increasingly arbitrary,” Ben Johnson, director of global ETF research at Morningstar, told reporters during the Chicago-based fund-research firm’s annual ETF conference, “as are legacy distinctions that are made toward different types of strategies, be they actively managed, passively managed or somewhere in between.”
Morningstar plans to launch its analyst ratings for ETFs later this year to 100 U.S.-domiciled ETFs, 30 in Canada, 100 in Europe and 40 that are either domiciled or cross-listed in Asia. Morningstar has been assigning analyst ratings to ETFs in Australia since 2014, and rates 50 Australia-domiciled ETFs.
The changes will also help advisors comply with regulatory pressure related to the Department of Labor’s fiduciary rule, Johnson said.