ETF Observer - 2014 October

Our ETF analyst team has recently published the ETF Observer.

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A September to Remember
It was a September to remember. The highlight of the month for us was our fifth annual Morningstar ETF Conference, which was held from September 17-19 at the Sheraton Chicago Hotel & Towers. The conference was our biggest and best yet (I’m obviously biased here). We had three days packed with terrific insights and lively debate. The high point of the event for me personally was having the privilege to share the stage with Gene Fama for an entertaining and candid discussion that covered everything from his monumental body of research to his Nobel experience. I want to thank everyone who attended, presented, participated in panels, covered the event, or otherwise contributed to its success in one form or another. For those who couldn’t make it, you can access our full conference coverage here.

Also, be sure to pencil next year’s Morningstar ETF Conference in your calendar. Our 2015 event will be held from September 29 – October 1 at the Chicago Sheraton Hotel & Towers—we hope to see you there!

September ended with the manager change heard round the world as Bill Gross announced he’d be leaving PIMCO to join Janus. Our Manager Research team has been working quite literally around the clock to assess the impact of Gross’ departure and to update our Morningstar Analyst Ratings for the affected funds. On September 29, we reduced our rating for PIMCO Total Return (PTTRX) from Gold to Bronze. Senior Analyst Eric Jacobson writes that the fund’s Bronze rating, “reflects Morningstar’s high level of confidence in PIMCO’s resources and overall abilities but also the uncertainty as to exactly how all of these parts will mesh in the wake of Gross’ departure.” You can access Eric’s full report here.

This month’s installment of ETF Observer features four articles and two fund spotlights from our Passive Strategies research team. In the first article, Mike Rawson examines Strategic Beta equity exchange-traded products’ historical risk-adjusted performance through the lens of the Morningstar Rating or “Star Rating”. Patty Oey follows with a look at U.S. investors’ current appetite for emerging-markets stocks. In general, it would appear that most U.S. investors are underweight emerging-markets equities and might be anchoring to an outdated view of the investment risks and opportunities present in developing economies. Alex Bryan contributes a pair of articles this month. In the first, he looks at some useful implements that investors might consider adding to their performance evaluation toolkits. His second article is a deep dive on a popular duo of dividend-oriented funds from Vanguard—Vanguard Dividend Appreciation ETF (VIG) and actively managed Vanguard Dividend Growth (VDIGX). Alex argues that choosing between the two boils down to investors’conviction in the ability of VDGIX’s team to continue to beat their bogy (VIG’s benchmark index, the NASDAQ U.S. Dividend Achievers Select Index) over the long haul. Lastly, this month we spotlight PIMCO Total Return ETF (BOND) and iShares Global Materials ETF (MXI).

To access the full US ETF Observer report, please click here.

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