Morningstar to Create New Database for Hedge Funds

February 02, 2004

Chicago firm tries to bring transparency to murky hedge fund world.

Chicago/San Francisco - February 2, 2004.   Morningstar said it is creating a global hedge fund and private partnership database to assist investors as they explore alternative asset classes. The Chicago-based stock and fund research house said it is responding to marketplace demand for practical hedge fund information and useful analytics.

Morningstar's database will include participating funds' investment strategy, performance data, portfolio manager information, and operations data.

'One of our goals in creating this database is to help make the hedge fund industry more transparent to all investors,' said Joe Mansueto, chairman and CEO of Morningstar.  'Advisors, investors and institutions who rely on our research are seeking the same quality of information about hedge funds as they evaluate the appropriateness of adding this type of asset class to a particular portfolio. By offering this data, Morningstar will meet the needs of current hedge fund users as well as broaden exposure and understanding of hedge funds to an entirely new market of investors who are considering the use of these investment vehicles.'

Hedge funds now represent more than $600 billion in investor assets worldwide, according to a September 2003 SEC staff report.  Institutional investors have flocked to hedge funds the past couple years.

'Morningstar has always taken the approach that fundamental analysis can help the investor best understand a manager's investment strategy and associated risks,' said Mansueto. 'We believe hedge fund data will benefit all types of investors -- sophisticated high-net-worth individuals, more risk-averse financially savvy institutional investors, and new investors who may be considering using hedge funds.'

Mansueto also said Morningstar recently began inviting hedge fund managers to participate in the database and the response has been positive. He added that the company is also looking into the possibility of introducing a rating system for hedge funds.

'In the future, a Morningstar Rating for hedge funds could benefit investors, but it's too early to determine if and when we'll develop a rating system,' said Mansueto.

 

 

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