Morningstar And BGI Link Up For New ETFs

January 01, 2004

Barclays Global Investors said it has inked a deal with Morningstar to license the Chicago stock and fund tracker's 16 style-based indexes.

BGI filed a prospectus for nine iShares Morningstar exchange-traded funds (ETFs) with the SEC.

With expense ratios ranging from 0.20%-0.30%, the funds listed in the filing are designed to track the nine Morningstar indexes for large-, mid- and small-cap growth, value and core style boxes.

With its highly recognizable brand name, databases and vaunted style boxes, Morningstar seems like a natural index provider.

"Many advisors follow Morningstar's research and determine a target asset allocation for their clients based on the Morningstar Style Box," said Lee Kranefuss, CEO of BGI's intermediary business.

"Our style box methodology is a very popular way of looking at the stock universe with financial advisors and individual investors. Now they will have actual investments based on the style boxes," said Joe Mansueto, founder, chairman and CEO of Morningtar.

So far institutional investors and sophisticated traders have been the primary users of ETFs, but Vanguard, BGI and others have eyed the financial advisor and re t a i l investor market.

Morningstar experienced at least one false start before lining up BGI as the ETF manager, having come to a tentative agreement to license its i n d e xes to UBS Global Asset Management for ETFs. UBS Global Asset Management has since indicated that its plans to leave the U.S.

ETF market and turn over the management of its two STOXX ETFs to State Street Global Advisors.

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