Morningstar announces new alternative funds categories

Morningstar has added 18 alternative investment categories to its fund category classification system for UCITS funds available for sale in Europe and Asia.

The new categories are intended to provide clearer descriptions of the underlying strategies used by alternative funds.

There is particular emphasis on moving away from the term “Absolute Return”. The previous Morningstar alternative investment categories of EUR Absolute Return, Non-EUR Absolute Return, and Long-Short are all replaced with new terminology.

The new categories of funds cover more than 3,000 Ucits share classes:

New category name
 Alt – Debt Arbitrage
 Alt – Diversified Arbitrage
 Alt – Event Driven
 Alt – Currency
 Alt – Fund of Hedge Funds – Equity
 Alt – Fund of Hedge Funds – Multi-strategy
 Alt – Fund of Hedge Funds – Other
 Alt – Global Macro
 Alt – Long/Short Debt
 Alt – Long/Short Equity – Emerging Markets
 Alt – Long/Short Equity – Europe
 Alt – Long/Short Equity – Global
 Alt – Long/Short Equity – UK
 Alt – Long/Short Equity – US
 Alt – Market Neutral – Equity
 Alt – Multi-strategy
 Alt – Systematic Futures
 Alt – Volatility

Christopher Traulsen, director of European and Asian fund research for Morningstar said: “Absolute Return as a fund category definition has become too associated with a broader industry marketing term that has made performance promises that have often failed to deliver. To make our categories more useful and transparent to investors, we reviewed our alternative peer groups to better categorise funds by the type of strategy deployed. We believe the new alternative categories do a superior job of capturing the range of strategies used by the represented funds, and we’re pleased to offer this further clarity to investors and fund providers.”



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