Competition in the analytical services segment of the rating industry is heating up with Morningstar introducing qualitative analyst coverage of about 30 of the largest and most heavily traded closed-end funds (CEFs).  There is the intention of reaching 100 CEFs in the US by the end of the first quarter of 2011, representing about 45% of all CEFs net asset value (NAV) in the US.   Plans are also in place to expand the offering to CEF equivalents such as investment trusts in the United Kingdom and listed investment companies in Australia.

Outsell’s Elisabeth Mason wrote in her recent Outsell Insight:  “By combining a vast data set acquired from a company like Fundamental Data with analytics capabilities honed from purchases like the structured finance credit rating agency Realpoints LLC [6], Morningstar can grow wider across financial instruments and deeper with meaningful analysis.”

Background:  Morningstar acquired Realpoint LLC, a Nationally Recognized Statistical Rating Organization, which expanded Morningstar into the ratings agency business with a focus on commercial mortgage backed securities.  Morningstar purchased, renamed, which provides clients with deeper insights into noteworthy disclosures buried in corporate SEC filings.  It acquired Seeds Group in France, Old Broad Street Research in the UK, and Aegis Equities Research in Australia.   Source:  Morningstar and Outsell Insights