All it took was a rating.
INVESCO Retirement Inc., Atlanta, began offering online investment advice by Chicago-based Morningstar Inc. last December, but not all of the plan sponsors it services could use it.
Sponsors that offer INVESCO's commingled trusts as investment options in their defined contribution plans could get advice only on retail mutual funds because Morningstar didn't rate commingled trusts, explained Robert Thomann, president of AMVESCAP National Trust Co., an Atlanta-based subsidiary of INVESCO Retirement.
But Morningstar is now calculating hypothetical Morningstar ratings for 12 of INVESCO's 29 collective trust funds, allowing them to compete with the more popular mutual funds by providing participants and sponsors with a way of evaluating their performance.
The ratings are considered hypothetical because Morningstar does not independently analyze collective trusts. Instead, Morningstar assigns the ratings by comparing risk-adjusted performance scores to similar mutual fund scores.
Morningstar will rate commingled trusts only in asset classes where INVESCO doesn't offer competing mutual funds, he said. These are the real estate investment trusts, stable value, small company growth, midcap equity, INVESCO National Asset large-cap core equity, small-cap growth, international and core balanced portfolios.
So far, 12 plans that have a mix of commingled trusts and mutual funds are offering Morningstar's online investment advice, Mr. Thomann said. Most of these are defined contribution plans with more than $10 million in assets.
