On the heels of success in categorization with U.S. funds, Morningstar has announced an October launch for a foreign funds classification system that the company hopes will aid fund-owners in investment decisions.
The five categories will be large-cap value, large-cap blend, large-cap growth, small/mid-cap growth and small/mid-cap value.
"We believe this new structure, which matches closely to our domestic-stock category structure, is better designed for choosing funds and building portfolios," Morningstar Managing Director Don Phillips said in a statement,
Lippers program, which will be implemented by January 2004, is modeled after the US Diversified Equity matrix, the companys classification system that groups funds based on the characteristics of its holdings rather than ambiguous language sometimes confusing to customers.
Robin Thurston, Lippers VP and global director of research, has said of the new system, "The new level of granularity will make comparisons between funds much more valuable." Lippers system will take its four current categories, which are International, International Small-Cap, Global and Global Small-cap, and re-classify them using the new style/market-cap matrices. Those categories currently account for more than $300 billion in assets.
Firms that prefer Lippers current classification system will still have it available if they choose, the company said.