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We recently learned that FINRA members may no longer use the average credit rating for bond mutual funds on any investor-facing communications that they create, nor may they distribute to investors a Morningstar report that contains this data point. It is our understanding that FINRA made this decision because of the discrepancy among fund companies in their calculations of average credit rating.
As a result, and pending further information from FINRA, Morningstar is removing the average credit quality data point from products that are used primarily by FINRA members and from reports that are intended to follow FINRA compliance guidelines. The change will take effect after 5:00 PM CST today, April 23, for Advisor Workstation, Site Builder, Hypothetical Illustrator, Annuity Analyzer, and Portfolio Builder, and will be reflected in the May (April-ending data) Principia release. FINRA is currently reviewing the Morningstar Fixed-Income Style Box to determine if FINRA-members will be able to use it in their investor communications.
FINRA is an important regulator and we are working with them to garner more information. We hope to find a solution that will allow us to continue to provide investors with important information on credit risk.
Products and reports affected:
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Morningstar, Inc. 22 W Washington Street, Chicago, IL 60602 |
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