Morningstar steps up number of commodity categories
A growing number of ETFs and mutual funds investing in commodities has led Morningstar Inc. to introduce six new commodity categories, four sector categories and one broad commodity asset class to its classification system.
A growing number of ETFs and mutual funds investing in commodities has led Morningstar Inc. to introduce six new commodity categories, four sector categories and one broad commodity asset class to its classification system.
The new categories will make it easier for investors to evaluate and compare the funds, the firm said in the statement.
“The change in the classification is a reflection of commodities becoming an important part of the mutual fund industry,” said John Rekenthaler, vice president of research for Chicago-based Morningstar.
“It also reflects the growth of the ETF industry, which has driven a lot of these categories such as agriculture, industrial metals and the broad basket. ETFs are slicing and dicing assets into narrower groups and are much more involved with commodities than the typical mutual fund.”
The categories will be used for both ETFs and mutual funds, and will be used to compare total returns as well as for Morningstar’s star rating analysis, he said.
The new commodity categories are agriculture; broad basket, which invests in a diversified basket of commodity goods; energy; industrial metals; precious metals; and miscellaneous.
The new sector categories are consumer discretionary, consumer staples, equity energy and industrials.
The firm also added commodities to its current set of broad asset classes, which are U.S. stock, international stock, taxable bond, municipal bond, balanced and alternatives.
The categories will be assigned to the commodities asset class, which will utilize the Morningstar Long-Only Commodity Index as its benchmark, according to the statement.
The new categories will be available in the firm’s web-based products today and rolled out in all other products by the end of July, according to the statement.
Prior to the changes, a commodities fund would have fallen under the natural resources category.
Morningstar last added a broad asset class in August 2008 with the introduction of the “alternatives” asset class.
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