The Inaugural Morningstar Awards for ETFs
We're pleased to announce the ETF Provider Awards and the 74 Retail and Institutional category winners for 2012.
At Morningstar, one of our key mandates is to boil the often-confusing world of investing down to a consumable assortment of the best funds. When it comes to exchange-traded fund investing, we do this largely through our ETF Analysts’ Favorites (available to premium subscribers here) and the Morningstar Ratings. However, the ETF Analysts’ Favorites list is based on a largely qualitative assessment of the ETF that considers the ETF's role in the portfolio as well as such factors as expenses, index construction, tax efficiency, and diversification. The Morningstar Rating is based on a quantitative assessment of an ETF's historic monthly risk-adjusted returns against its category average.
The new Morningstar Awards for ETFs are based on a purely quantitative process that measures an ETF’s ability to track its index and the ease of tradeability. The awards place less emphasis on historic returns. After all, by investing in an index-focused ETF, investors are expecting to get returns somewhere in the ballpark of the index. Therefore, their focus is on other factors that can cause their ETF’s returns to deviate from the index’s. These factors include an ETF’s ability to match its index with minimal expenses, tracking error, and trading costs.
Michael Rawson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.