Morningstar ETF Research

Transcription

1 Morningstar ETF Research Ben Johnson ETF Strategist 2010, Morningstar, Inc. All rights reserved. <#>

2 Overview ETF Market Evolution Morningstar s ETF Research Effort 2

3 3 ETF Market Evolution

4 Global ETP Asset Growth by Broad Category Group Source: Morningstar Direct 4

5 European ETP Asset Growth by Broad Category Group Source: Morningstar Direct 5

6 European ETPs Outpace Fund Growth % % 4.0% % % % 0 0.0% Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Source: Morningstar Data ETP Assets in Bil EUR ETPs as % of Fund Assets 6

7 Still Seeing Large Inflows in Europe 286 new ETPs introduced in Europe through September 2010

8 European ETP Flows by Category Emerging Markets and Precious Metals experiencing large inflows

9 Proliferation of Asset Classes Net Assets ( Bil) Market Share (%) Asset Class Equity Fixed Income Alternative Commodities Allocation Subtotal - All Long Term Money Market Total Copyright 2010 Morningstar, Inc. 9

10 Major ETP Providers in Europe Rank Provider # of ETPs Net Assets ( bil) Market Share (% Total Net Assets) 1 ishares Lyxor db x-trackers ETF Securities Credit Suisse ZKB (Balfidor) ComStage Amundi Source UBS EasyETF ETFlab Source: Morningstar Direct. Data as of October 8, 2010

11 11 Morningstar s ETP Research Effort

12 Morningstar s Holistic Approach to ETP Solutions Unified effort bringing the best in ETP data, research and tools to clients to support their analytical, trading and educational needs Long term commitment to this space ETP research staff has quadrupled in size Growth and globalization of ETP database Launched first European ETF Centers, Canadian and Australian ETF research in

13 A Global Effort US ETF research was launched in 2006 Team currently consists of 7 analysts Broad effort Individual Fund Reports ETF Investor Newsletter ETF Solutions Centers on brokerage platforms New launch coverage ETF Invest

14 A Global Effort Canadian ETF Research Launched in Q ETF Solutions Center launched on Disnat online brokerage portal Australian ETF Research Launched in Q Qualitative Ratings covering nearly 100% of ETF assets 14

15 Morningstar European ETP Research The Team European ETP Research team was formed on 1 January 2010 Currently 5 strong with 3 analysts based in Chicago headquarters and 2 in London Bradley Kay, Associate Director Ben Johnson, Strategist Hortense Bioy, Senior Analyst Alan Rambaldini, Analyst Jose Garcia-Zarate, Analyst Plans to add 2 new analysts in Europe in

16 ETF Centers UK, Germany, France, Italy, Switzerland, Netherlands Regular articles (educational, topical, investment ideas) Weekly ETF Times Monthly webinar series ETF Survey Tools 16

17 Individual Fund Reports Distilled due diligence on individual ETPs for institutions, advisers, and individuals Suitability Fundamental View Index Construction Fund Construction Fees Alternatives First 150 reports will cover ~70% of assets 17

18 Suitability What role might this product play in a portfolio? Core building block Broad equity and fixed income exposure for the core Tactical tool Sector and country indices for valuation plays Thin slices of the bond market for duration management 18

19 Fundamental View What are the underlying economic drivers? MSCI Brazil may be more of a play on China than Brazil Silver ETPs may be driven more by concerns over sovereign balance sheets than market fundamentals What are the key risks? Valuation Recent multiples relative to historical averages Morningstar Price-to-Fair Value Estimate 19

20 Index Construction Often overlooked, sometimes misunderstood Weighting methodology Re-balancing Biases Concentration Correlation Potential structural defects commodity futures indices How does security selection or weighting affect the product? Does the portfolio match the name? Clean energy ETFs holding Shell and GE Quality screens, equal weighting, fundamental weighting, etc. Crucial as product innovation continues 20

21 Fund Construction How is the fund built to track the index? Physical vs. Synthetic Collateral policies Sampling vs. full replication Share lending Legal structure 21

22 Fees What is the total expense ratio? Where does this product stand relative to its peers? 22

23 Alternatives What are the other options for achieving the same or similar economic exposure? Owning gold outright versus through an ETP Daily inverse/leveraged products versus buying puts, selective shorting, or buying on margin What are the most similar ETP options available? Relative carrying cost Relative liquidity Relative tracking 23

24 On The Road Conferences, road shows, and webinars allow us to educate and engage investors >20 speaking engagements in 2010 Morningstar Conferences Morningstar/Lyxor/Financial Times Road Show Morningstar/Credit Suisse Road Show BrightTALK ETF Summit Monthly webinars through ETF Centers 24

25 The Future Publishing first 150 individual fund reports Deep Dive industry reports Collaborating with internal consulting teams Improving flows calculations ETF Surveys Converging local country ETF Centers with.com better data, tools, etc. 25

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