Morningstar Rolls Out Managed Account Tracking System

The tone was somber at Morningstar’s 18th annual investment conference in Chicago this week, where fund managers are projecting a slow, weak rebound. Robert Rodriguez, principal and CEO of First Pacific Advisors, said he doesn’t expect solid economic recovery until next year.

The tone was somber at Morningstar’s 18th annual investment conference in Chicago this week, where fund managers are projecting a slow, weak rebound. Robert Rodriguez, principal and CEO of First Pacific Advisors, said he doesn’t expect solid economic recovery until next year.

The good news for reps, said Morningstar Managing Director Don Phillips, is that investors who used financial advisors fared better than those who didn’t. That’s at least partly because reps have access to more information than individual investors, Phillips said in unveiling a new Morningstar product, Principia for Managed Accounts.

The tracking system provides data on more than 1,700 managed portfolios from about 500 firms, representing about 75 percent of the managed account marketplace. It compiles performance data, historical returns, investment style and other intangibles relevant to managed accounts, including information about tax efficiency and whether a manager should exclude certain stocks based on the investor’s needs. An advisor can cross-reference data to see which company, such as, say, Lockwood, uses a portfolio manager they're most interested in offering their clients.

It's supposed to help "advisors do a first pass-through on the platforms" before determining which works best for them, says Ryan Tagal, separate accounts product manager for Morningstar. Because of the unregulated nature of separate accounts, they're more difficult to rate than mutual funds, says Tagal. So, for now, Morningstar’s Principia will merely track the portfolios.

"Some people felt that putting a star on this minimizes the value of what a separate account is," says Tagal. "But we're still developing what a rating system may look like. It may try to incorporate customized features and could have two ratings, one for customization and one for performance."

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