Investment Products and Service Launches

Morningstar Developing Enhanced Risk Identifying Solution; and Toroso Launches New ETF Index


Morningstar Developing Enhanced Risk Identifying Solution

Independent investment research provider Morningstar is developing a solution designed to identify unintended risk and exposure across multiple portfolios managed at an adviser’s discretion by using proprietary algorithms and behavioral science.

The Morningstar Data Catalyst can also help advisers meet best-interest requirements and assist firms seeking new business opportunities with existing investors. The firm plans to launch this product through software services and data feeds.

Building on the firm’s proprietary Global Risk Model, the software will help identify portfolio risk by analyzing each stock’s underlining economic exposure to 36 factors including six exclusive to Morningstar.

The firm also plans to expand this risk model to additional asset classes, beginning with corporate, sovereign, and municipal bonds later this year.

“Morningstar sees an unmet need to view risk through multiple, additional lenses,” says Tricia Rothschild, chief product officer for Morningstar. “We work to understand risk at the firm level, and how it may create unintended risk consequences within individual client portfolios. We take into account underlying exposures within individual securities using our Global Risk Model. And we examine how the psychology and related choices of the individual investor can introduce unintended and often unmeasured sources of risk, particularly in the face of significant market events.”

The notion that traditional risk measures have not effectively addressed implementation gaps led Morningstar behavioral science researchers Ryan Murphy and Steven Wendel to develop this “Goals-Based Risk” framework. This strategy aims to create a detailed investor profile incorporating risk reactivity—how market volatility may affect his or her risk tolerance going forward—and offers guidance to advisers on the types and timing of interventions they can make to keep the investor on track to reach established financial goals.

NEXT:Toroso Launches New ETF Index

Toroso Launches New ETF Index

Asset management firm Toroso has launched a new exchange-traded fund (ETF) tracker.

The Toroso ETF Industry Index allows investors to measure the performance of the wider ETF Industry including ETF sponsors, index and data companies, as well as trading and custody providers, liquidity providers and exchanges.

The Index has been licensed for use by the new ETF Industry Exposure & Financial Services ETF (TETF), which is designed to provide exposure to publicly-traded companies that derive revenue from the ETF ecosystem.

For more information, visit