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Morningstar launches outsourcing unit for Mifid II

Morningstar has launched a unit for advisers and financial institutions to outsource fund selection and asset allocation in a “post-Mifid II world”.


Jessica Tasman-Jones

The new business division, Manager Selection Services, is part of Morningstar Investment Management and will provide three services:

  • Select Lists – the provision and maintenance of “best in class” lists of Morningstar-rated funds across all main asset classes. The funds are collated by the Manager Selection Services team to give broad-based exposure to Morningstar-rated funds. In addition, clients can have access to Morningstar’s quantitative analysis of non-Morningstar rated funds to satisfy their specific fund requirements.
  • Migration Services – conducting holistic analysis of existing fund lists and providing recommendations with a view to improving long-term investor outcomes.
  • Model Portfolio Service – access to global, multi-asset portfolios created using Morningstar’s asset allocation and manager selection expertise with a strong and credible track record of successful delivery since 2009. These model portfolios cover a range of risk categories and can be mapped directly to bespoke risk tolerance questionnaires or to Morningstar’s own robust risk tools. This service is designed for those institutions that do not want to completely outsource the management of their assets (i.e. want to retain investment discretion), while including Morningstar’s global expertise in asset allocation and fund selection at the heart of their investment proposition.

Morningstar said in a press release the services will help intermediaries deliver better client outcomes, reduce costs and comply with regulatory and governance pressures.

Manager Selection Services director Gavin Corr said the unit will leverage Morningstar’s 116 manager research analysts and 107 investment management professionals worldwide.

Corr said: “In a post Mifid II world, financial institutions and advisers are increasingly looking to outsource fund selection and model portfolio management to third parties due to the increasing regulatory scrutiny, growing costs of having in-house investment capability and the relentless pressure on margins due to fee compression.”

Morningstar had $195bn in assets under advice and management as of 31 December 2017.