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Margaret Kirch Cohenmargaret.cohen@morningstar.com
Morningstar to Create Hedge Fund Database -- Initiative Aims to Boost Industry Transparency and Broaden Market Exposure

CHICAGO, Jan. 26, 2004 – Morningstar, Inc., today announced that it is creating a global hedge fund and private partnership database to assist investors as they explore alternative asset classes.  The new initiative responds to marketplace demand for practical hedge fund information and useful analytics.  Morningstar’s database will include participating funds’ investment strategy, performance data, portfolio manager information, and operations data.

“One of our goals in creating this database is to help make the hedge fund industry more transparent to all investors,” said Joe Mansueto, chairman and CEO of Morningstar.  “Advisors, investors and institutions who rely on our research are seeking the same quality of information about hedge funds as they evaluate the appropriateness of adding this type of asset class to a particular portfolio.  By offering this data, Morningstar will meet the needs of current hedge fund users as well as broaden exposure and understanding of hedge funds to an entirely new market of investors who are considering the use of these investment vehicles.”  

Morningstar plans to complete its hedge fund database over the next year, and Ryan Tagal, product manager, is leading the firm’s initiative.  The company initially will offer hedge fund information through Morningstar DataLab®, a Web-based research product for institutional investment professionals.  Access to Morningstar’s hedge fund database will be restricted to accredited investors, as defined by the U.S. Securities and Exchange Commission, and their advisors.

Hedge funds now represent more than $600 billion in investor assets worldwide, according to a September 2003 SEC staff report.  Offering comprehensive data on hedge funds is a natural extension for Morningstar.  As a leading provider of independent, objective investment research, Morningstar has amassed comprehensive data on stocks, mutual funds, exchange-traded funds, closed-end funds, variable annuity/life subaccounts, separate accounts, and 529 college-savings plans.  With its wealth of data on such a wide range of investment vehicles, the company can also provide a uniquely comprehensive picture of an investor’s portfolio.

“Morningstar has always taken the approach that fundamental analysis can help the investor best understand a manager’s investment strategy and associated risks,” Mansueto said.  “We believe hedge fund data will benefit all types of investors – sophisticated high-net-worth individuals, more risk-averse, financially savvy institutional investors, and new investors who may be considering using hedge funds.”

Mansueto said Morningstar recently began inviting hedge fund managers to participate in the database and the response has been positive.  He added that the company is also looking into the possibility of introducing a rating system for hedge funds.  “In the future, a Morningstar Rating for hedge funds could benefit investors, but it’s too early to determine if and when we’ll develop a rating system,” he said.

About Morningstar, Inc.
Chicago-based Morningstar, Inc. is a global investment research firm, offering an extensive line of print, software, and Internet-based products and services for individuals, financial advisors and institutions.  The company is a trusted source for investment information, data, and analysis of stocks, mutual funds, exchange-traded funds, closed-end funds, 529 plans, separate accounts, and variable annuity/life subaccounts.

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