Given the ever-increasing popularity of hedge funds among institutional and high-net-worth investors, Morningstar is considering applying its five-star rating to them and roll out hedge fund research by the end of the year, Chief Executive Officer Joe Mansueto told the Chicago Tribune. Already, Morningstar has qualitative information on 3,000 of the universe of 8,000 hedge funds in its database.

As to how Morningstar will succeed in getting hedge funds, notoriously secretive, to fess up on their holdings, investment strategies and performance, Mansueto admitted that while his firm doesn't have a game plan on this right now, he expects that as the hedge fund industry becomes more competitive, investors will be able to force fund managers to be more open. Morningstar has also hired investment analysts to interview hedge fund managers.

"It's a very opaque industry," Mansueto said. "So we need to build up in a grass-roots fashion an audience for our hedge fund data. Investors can demand that hedge funds give us their data. They can say, 'We're not going to invest in you because you're not in Morningstar's database.' We need to build up critical mass."

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