Morningstar Expands Databases to Help with Fee Disclosure

Morningstar expanded and standardized its managed product databases to help retirement plan advisers and sponsors comply with new participant fee disclosure requirements.

Morningstar increased the number of strategies it tracks, as well as the data it collects in its collective investment trust, open-end mutual fund, money market fund, exchange-traded fund (ETF), and private fund database, which includes custom target-date funds.  

“More and more defined contribution plans are offering participants an array of investment vehicles, such as custom target-date funds, collective investment trusts, and ETFs in their plan lineups,” said Mary Beth Glotzbach, senior vice president of institutional software for Morningstar. “While these vehicles offer benefits, they can make comparison difficult for investors. In addition, plan participants may not be aware of the variety of administrative fees they pay.” Glotzbach said their goal is to help plan sponsors comply with the Department of Labor requirements and give investors more transparency around fees, improve access to information and give consistent presentation of information across investment types.  

Under the 404(a)(5) regulation, plan sponsors have until August 30 to provide participants with standardized information about the fees paid for management and administration of the plan, investments and optional services, like managed accounts. To help companies comply, Morningstar is collecting and calculating new data points across managed product databases, including principal risks from fund prospectuses, since inception benchmark and category returns, gross and net operating expenses, turnover ratios and glide paths. Morningstar has also standardized data collection and calculations across both registered and unregistered investments to ensure consistency.   

As of March 31, Morningstar tracked 124,900 mutual fund share classes; 9,400 ETFs; 9,800 separate accounts and collective investment trusts; and 7,000 private funds.