Morningstar Launches Qualitative Research Reports and Ratings for Closed-End Funds

CHICAGO, Jan. 26, 2011 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, has launched analyst coverage of about 30 individual closed-end funds (CEFs). The company plans to cover approximately 100 CEFs traded in the United States by the end of the first quarter of 2011, which represents about 45 percent of the net asset value of the U.S. CEF universe and includes the largest and most heavily traded CEFs.

"Closed-end funds are unique investment vehicles in that they offer broad diversification like mutual funds, but trade on national exchanges and can use financial leverage. Our new, comprehensive research reports combine Morningstar's approach to analyzing both mutual funds and equities to evaluate the unique attributes of closed-end funds," said Mike Taggart, closed-end fund strategist for Morningstar. "The majority of investors don't have readily available access to third-party, independent research on closed-end funds, and we want to fill that void by offering the same caliber of research and analysis we already provide for other investment vehicles."

For each closed-end fund under coverage, Morningstar issues a comprehensive research report containing both quantitative and qualitative analysis. Morningstar also generates the Morningstar Qualitative Rating™, which follows a five-point scale — Elite, Superior, Standard, Inferior, or Impaired — and is based on the analysts' evaluation of five major factors: the fund's management team, the investment process, the parent company, performance, and fees. The accompanying qualitative analyst reports contain Morningstar's rationale behind the qualitative rating, along with an evaluation of the fund's portfolio positioning, investment approach, net asset value (NAV) performance, risk and return profile, discount/premium history, board of directors, fees, leverage, distributions, and Morningstar's opinion of the fund.

The qualitative research reports and ratings are currently available in Morningstar Direct(SM), Morningstar Office(SM), and to Premium subscribers on Morningstar.com®. In addition to U.S.-based coverage, Morningstar plans to expand its qualitative analyst research reports and ratings to CEF-equivalents outside the United States, including investment trusts in the United Kingdom and listed investment companies in Australia.

In April 2010, Morningstar launched the "CEF Weekly," a column about CEFs on Morningstar.com. In November, Morningstar revamped its "Quote" pages for CEFs on Morningstar.com, to present more CEF-relevant data, such as leverage ratios, distribution sources such as yield, and expense ratios adjusted for interest expense. For several years, Morningstar has provided quantitative data, tools, and the Morningstar Rating™ (often referred to as the "star rating") for closed-end funds, which will still be available to investors. The Morningstar Rating for closed-end funds is a quantitative measure based on risk-adjusted return, which serves as a complement to the new Morningstar Qualitative Rating for conducting closed-end fund research.

Morningstar acquired Fundamental Data Limited, a leading provider of closed-end fund data in the United Kingdom, in October 2008. Through the acquisition, Morningstar covers all UK- and U.S.-domiciled closed-end funds as well as offshore and local closed-end funds worldwide, and provides data on more than 1,500 closed-end funds and has more than 3,000 data points for each fund.

To read the "CEF Weekly" article about the launch of Morningstar's qualitative CEF coverage, please visit: http://www.morningstar.com/goto/cefs.

To view a list of closed-end funds currently under Morningstar's coverage, please visit: http://www.morningstar.com/goto/cef-reports.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 370,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 26 countries.

©2011 Morningstar, Inc.  All rights reserved.

MORN-R

SOURCE Morningstar, Inc.