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Morningstar Managed Portfolios Can Now Access Morningstar Funds Trust

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Advisors using Morningstar Managed Portfolios as a third-party source for investment assets can now access allocations from the Morningstar Funds Trust.

The trust is an open-end investment management company consisting of nine multi-manager active funds chosen and managed by Morningstar Investment Management.

(Related: Morningstar Prepares to Launch Its Own Funds)

Historically, Managed Portfolios were limited to thirty-party funds that Morningstar had chosen. Now Managed Portfolios can allocate assets to funds in the Morningstar Trust whose managers may not even offer a mutual fund or whose subadvised account structure is less expensive, allowing Morningstar Investment Management to pass along costs savings to investors and implement more investment ideas more nimbly.

(Related: Morningstar Launches Its Own Funds for Advisors)

Morningstar says this new structure can help investors save about 20% on average while also increasing tax efficiency and reallocation.

“We are providing investors using Morningstar Managed Portfolios with greater benefits, including a reduction in overall cost for managed portfolios whose underlying holdings were exclusively third-party mutual funds,” said Cindy Galiano, director of product management at Morningstar Investment Management, in a statement. “The Morningstar Funds also offer greater flexibility for portfolio managers to express their investment ideas, and thus increase portfolio diversification.”

Morningstar Investment Management is in the process of migrating current accounts that use actively managed, third-party mutual funds to the new structure.

The nine funds in the Morningstar Funds Trust include three stock funds, four bond funds, a total return allocation fund that can invest in stocks and bonds, and an alternatives fund. All but two have multiple managers, and their expense ratios range from roughly 50 to 130 basis points, initially. Morningstar will “waive all or a portion of its advisory fees and, if necessary, … assume certain other expenses” for at least one year, according to its SEC filing for the trust.


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