Morningstar Conference to Concentrate on Bear Market

At the Morningstar Investment Conference in Chicago this week, speakers are expected to concentrate on the economy and how asset management firms should respond to the state of the financial markets.

“I think the discussions will be more macro-driven than in other years,” Russ Kinnel, director of fund research at Morningstar, told Dow Jones. Specifically, he expects topics to include the future of the financial services and automotive industries, bond yields, inflation, lower fund fees and “how the government will unwind its foray into the private sector and how the economy will react.”

Given the ongoing uncertainty that the financial crisis has created, Kinnel expects asset managers to concentrate more than ever on proper asset allocation and diversification. And, hopefully, investors are ready to step up their savings, Kinnel added: “Hopefully, last year shocked people from plugging in historic rates of return [for their portfolios] as if these were guaranteed certificates of deposit.”

Kinnel was harder on the mutual fund industry, saying that it should not use overly optimistic projections of retirement savings calculators to encourage sales. “The industry can do a better job of explaining how to use funds and what the risks are,” he said. “They need to do a better job of being stewards and not salesmen. That’s too misleading for a massive industry to be based on.”