The company said it was launching the project “in response to the escalating cost of market-cap-weighted equity indexes” in a bid to lower industry costs and provide better outcomes to investors.
“Fund investors today are paying substantially lower fees than when we opened our doors more than 30 years ago,” said Morningstar chair and chief executive Joe Mansueto.
“One industry cost that’s moving in the opposite direction is the fee charged for indexes used to measure and compare relative investment performance.”
Despite benchmarking being an “extremely important” process, Mr Mansueto said there were “only a handful of index providers”, and these providers were using their power to dramatically increase fees.
“Benchmarks are meant to explicitly represent the performance of the underlying markets,” he said.
“As such, we believe market-cap-weighted equity indexes are virtually interchangeable and should be priced accordingly, but they’re not. That’s why we’re embarking on this project.”
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