Many investment processes are designed specifically to tune out any kind of narrative – and indeed they may turn to passive strategies as part of that plan – so it is interesting to hear Ron Bundy, president of Morningstar Indexes and Morningstar Sustainalytics, identify a major function of asset-related benchmarks as a way “to tell stories about markets”.
“Morningstar is a bit unusual among index providers in that we have a strong presence with asset managers, wealth advisers and other intermediaries, and also with end-investors,” he says. “The intermediaries are often the clients of our asset managers and then the end-investors are the clients of our wealth or adviser clients. As such, we are working hard to serve all three constituents of this trifecta in surround sound, if you will.
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“We understand the use cases for indexes are different among these different elements. Asset managers, for example, look at indexes as benchmarks and use them to manage and adjust risk – and sometimes they build investment products like ETFs off of them. As for the adviser segment, sometimes they use those investment products with their clients, for sure – but they really use indexes to tell stories about markets.
“So we make sure we have a robust offering in that regard and try to help advisers make sense of markets through the indexes and the research we create. The third, most important, element are the end-investors, who are being impacted by the decisions asset managers and wealth advisers are making. We have a great relationship with them too – through Morningstar.com and our other digital properties.”
See the whole article in the July/August issue of Portfolio Adviser
