CHICAGO — Morningstar Associates LLC, the investment advisory arm of fund research firm Morningstar Inc., will offer itself as a one-stop shop to manage the investment programs of midsize endowments and foundations.
In an interview, Scott Riccio, Morningstar Associates' newly named director of foundation and endowment services, called the move a "natural extension" of work the firm already does — from asset allocation to manager selection and monitoring — for insurance and retirement outsourcing clients. The firm has $35 billion in assets under advisement, not including assets advised separately by Ibbotson Associates Inc., the Chicago-based firm Morningstar acquired on March 1.
Endowments and foundations with less than $1 billion in assets are increasingly looking for one firm that can offer a "seamless, comprehensive" service, building and maintaining portfolios tailored to their specific grant-making missions, Mr. Riccio said. Several told Morningstar they have yet to find a program that meets their needs, he said.
Calling smaller endowments and foundations an "underserved niche," Joe Mansueto, Morningstar's chairman and chief executive officer, predicted his firm's experience at evaluating money managers and crafting portfolios should help its new offering garner a "very strong reception."
Mr. Riccio said Morningstar will focus on the roughly 1,000 endowments and foundations in the U.S. with assets of $50 million to $1 billion, although the "sweet spot" will likely be those with $300 million to $500 million.