Initially, the program will offer portfolios of mutual funds researched and monitored by Morningstar. The company will select funds, with input from financial intermediaries, based on a number of defined portfolio characteristics, including tax and risk sensitivity and timetables. Next year, the company plans to add separate accounts managed by leading investment management firms so that portfolios can be created with both mutual funds and separate accounts, according to the company.
Morningstar has brought in Art Lutschaunig as chief investment officer for the new division. Lutschaunig was formerly director of research and investments for Strategic Advisers, a division of Fidelity Investments, where he ran a similar type of program to what Morningstar will introduce, said Don Phillips, managing director of the company.
The program will initially employ Lutschaunig and four additional analysts, according to Phillips. The team of analysts will be separate from Morningstars team of retail analysts and offering the new program will not detract from Morningstars capability to provide unbiased investment information, Phillips said.
"Weve certainly thought about that issue," he said. "We cant really influence the price though. If we were selecting stocks and commenting on stocks, that would be one thing, but by saying more favorable things about funds, we cant influence their price."
