Morningstar to Uncover Mutual Funds' Derivative Exposure

Morningstar has been working with mutual fund companies for the past year to develop a tool to permit investors to determine a fund’s exposure to derivatives, Dow Jones reports.

Morningstar Chairman and Chief Executive Officer Joe Mansueto spoke of the efforts at Baron Funds’ annual investment conference last Friday. “Fund companies have been very cooperative in working with us to get that information, [which] is not always apparent,” Mansueto said.

The use of derivatives has expanded, even among mutual fund companies, and many of them were linked to the subprime mortgages that blew up over the summer.

Mansueto added that Morningstar intends to offer data on funds-of-funds, hedge funds and retirement income instruments. Currently, Morningstar covers stocks, mutual funds, closed-end funds, exchange-traded funds, annuities and pension funds.

“Morningstar today is much more than mutual funds,” Mansueto said.

In addition, Morningstar intends to more than double its overseas revenue from 22% to 50%, he said.