Morningstar launches F-series fund database

(March 8, 2005) Morningstar has just added another toy to the toolbox for fee-based advisors and those thinking about heading in that direction.

The Morningstar Canada F-series fund database, available to advisors who subscribe to the F-series research module of the company’s Advisor Workstation, has over 800 funds listed from 29 different sponsors.

The database is not intended to replace existing fund reporting. Performance history, for example, is limited since fee-based planning and low-load funds are a relatively new development in the industry and performance data is only available as far back as September 2000. Similarly, key data like Morningstar ratings, fund assets, manager details, portfolio turn over, sector weightings and top holdings are all based on load versions of the funds.

Teena Ward, product manager for Morningstar Advisor Workstation says rating the funds is not an option at this point, given the relatively small size of the F-class universe. So far, she says there seems to be a lot of interest in the F-class database. Already the company has released the product to a major insurance company.

Morningstar’s database group has been working on the project, gathering data feeds and making contact with mutual fund companies, since July of last year. In building the product, the team designed the database as part of the Advisor Workstation research module to appear alongside the existing mutual fund, hedge fund, and segregated fund folders.

The module features behave much like existing online Morningstar products, allowing advisors to build tables of funds, create columns of different information and present the material using different views, graphing and reporting.

“It’s a comprehensive listing of what’s available to fee-based advisors,” says Ward. “It allows a level playing field comparison of advisor sold funds whose commissions are unbundled.”

F-series funds usually have cheaper MERs — around a full percentage point lower than their front-end and deferred sales counterparts — because the funds make no provisions for any commissions, trailer fees or other advisor compensation. Advisors who sell them charge clients based on the size of their account, or charge by the hour for their advice. The funds are designed to separate fund costs from the cost of advice.

According to Morningstar, the oldest F-series funds, launched in December 1999, are sponsored by Mackenzie Financial.

Filed by Kate McCaffery, Advisor.ca, kate.mccaffery@advisor.rogers.com