News Flash- Morningstar, Lipper Reclassify Foreign Funds
October 6, 2003
On the heels of its re-categorization of U.S. funds, Morningstar this month is launching a new foreign funds classification system that the company hopes will aid fund-owners in investment decisions. The move follows a similar move by Lipper in late July to retool its own international classifications.
Morningstar said it made the move to combat the increased specialization in recent years of the foreign-stock mutual fund market. That, coupled with investors' growing tendency to invest in smaller foreign companies, led to a decision that would help the investors understand differences among foreign funds much as they do domestic funds a no-brainer.
The five categories will be large-cap value, large-cap blend, large-cap growth, small/mid-cap growth and small/mid-cap value.
"We believe this new structure, which matches closely to our domestic-stock category structure, is better designed for choosing funds and building portfolios," said Morningstar Managing Director Don Phillips.
Lipper's program, which will be implemented by January 2004, is modeled after its U.S. diversified equity matrix, which groups funds based on the characteristics of their holdings rather than ambiguous language sometimes confusing to customers. The new system will take its four current categories - international, international small cap, global and global small cap - and reclassify them using the new style/market-cap matrices. However, firms that prefer Lipper's current classification system will still have it available if they choose.
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