There's a new player entering the mutual fund ratings business, at least for exchange-traded funds. InvestmentNews' Jessica Toonkel reports that IndexUniverse is launching the beta version of its ETF ratings this week, going head to head with Morningstar.

According to InvestmentNews, the San Francisco-based research specialists will score ETFs on efficiency, fit and tradability (with help from Knight Capital Group on the tradability front) but hasn't decided on how to sell the ratings.

IndexUniverse research director Dave Nadig specifically called out Morningstar's ETF ratings as needing a tune up.

"Their fundamental rankings look at the persistence of performance and we think that's a flawed way of approaching ETFs," Nadig told the trade pub. "An ETF based on the S&P can lose a star because the market went down and we think that doesn't make sense." 

Edited by: Neil Anderson, Managing Editor


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