Analysts evaluate the funds on numeric factors as well as qualitative factors including people, process, parent, performance and price. They then rate the funds on a five-tiered scale. From highest analyst conviction level to lowest, the ratings are gold, silver, bronze, neutral and negative.
“The strategies employed in alternative funds are often new and sometimes complex,” said Nadia Papagiannis, director of Morningstar’s alternative fund research and editor of Alternative Investments Observer. “Our goal with the Analyst Ratings and Global Fund Reports is to help institutions and advisers research and compare funds as they continue to seek diversification through alternative investments.”
The Morningstar Analyst Rating for alternative mutual funds and the analysis are available on Morningstar.com and MorningstarAdvisor.com. The new Analyst Ratings, supporting analysis, and Global Fund Reports are also available in Morningstar Direct and in Morningstar Office.
Over the next year, the company plans to increase alternatives coverage to approximately 100 funds.