Morningstar to replace funds in its managed portfolios with nine of its own

Morningstar to replace funds in its managed portfolios with nine of its own
New sub-advised funds, offered exclusively through financial advisers, are intended to lower costs and provide 'greater flexibility.'
JUL 12, 2018

Morningstar Inc. will start replacing the mutual funds in its managed portfolios with nine funds of its own, removing a layer of costs embedded in the current fee structure, the company said Thursday. The Morningstar funds were declared effective by the Securities and Exchange Commission on Wednesday, and the replacement process will begin in the second half of the year. Morningstar said the nine funds will be offered exclusively through fee-based financial advisers offering its managed portfolios, not as standalone funds. The new funds will be sub-advised by many of the same investment managers used in the multi-asset managed portfolios. In many cases, the company said, the sub-advised structure will give Morningstar "greater flexibility to express investment ideas and adjust portfolios." The new funds are: Morningstar U.S. Equity Fund, Morningstar International Equity Fund, Morningstar Global Income Fund, Morningstar Total Return Bond Fund, Morningstar Multisector Bond Fund, Morningstar Defensive Bond Fund, Morningstar Municipal Bond Fund, Morningstar Unconstrained Allocation Fund and Morningstar Alternatives Fund. "Minimizing cost while selecting high-quality fund managers was the key driver in our decision to design and launch our own mutual fund," said Daniel Needham, president and chief investment officer of Morningstar Investment Management, in a statement.

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