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Hot Topics at This Week's ETF Invest Conference

Morningstar's first ETF Invest Conference is raring to go.

Robert Goldsborough, 09/15/2010

With investor interest in ETFs at an all-time high, exchange-traded funds' continued dramatic growth in the face of the last two years of volatile markets, and ETFs' impact on the market greater than ever, Morningstar is hosting its first ETF Invest Conference from Wednesday through Friday this week in Chicago.

The conference offers investors insights into some of the hottest tactical and strategic themes that are related to ETF investing right now, including emerging markets, currencies, commodities, hedge fund strategies, taxes, portfolio construction, dividends, and active ETFs.

In addition, attendees will have the opportunity to hear broader discussions on the ETF landscape from some of the most important pundits in the space, including those from Morningstar, ETF Trends, and IndexUniverse, and from past and present executives at ETF providers like iShares, State Street, Vanguard, and ProShares.

One of the biggest questions investors are currently asking relates to active ETFs. Active ETFs have been available to investors for about two years now but have not really taken off, despite the appeal for some investors of combining active portfolio management with the exchange-traded product structure. A panel of pioneering active ETF managers, including Mitch Rubin of RiverPark Capital, Mike Trigg of WCM Investment Management, and David Rolfe of Wedgewood Partners, will talk about the current landscape and convey why they felt the ETF structure was the best way to launch their strategies.

Investors also recently have been drawn to supercharged growth in developing economies, particularly given increasing uncertainty about economic growth in developed markets, concerns about a "double-dip" recession in the United States, and fears of a long-term decline in the dollar. In particular, foreign-debt ETFs that recently have been launched in emerging markets have attracted significant investor interest. David Semple, Van Eck Funds' director of international equity, will give investors a sense of what the outlook is for emerging markets on a regional and individual country basis and will separate the opportunities from the traps.PAGEBREAK

For investors in ETFs, the subject of taxes isn't a dry topic relegated to dusty textbooks. ETFs deliver tax-efficient strategies that are superior to those of their mutual fund cousins. At the same time, some investors may be surprised to learn that not all exchange-traded products are created equal, taxwise. A panel of tax experts, including Ed Baldridge of Baldridge Asset Management, Mark Balasa of Balasa, Dinverno & Foltz, and Tom Driscoll of Deloitte, will sort taxes out for investors, sharing their views on the benefits and pitfalls of various exchange-traded product structures, and also will offer suggestions on how best to use ETFs to manage and improve the overall tax efficiency of an investor's portfolio.

One of the single biggest draws for ETF investors is their diversification benefits. ETFs allow investors to easily access commodity markets that were previously inaccessible. Investors have responded in kind to new commodity ETFs, pouring billions of dollars into funds that speculate on short-term price movements in natural resources, even as returns have remained questionable. As prices of progressively distant contracts become more expensive, an upward slope of the futures curve develops, creating a situation known as contango. In contangoed markets, rolling contracts forward to avoid physical delivery will garner a loss. A new fund launched in August, United States Commodity Index USCI, is designed to limit, if not completely eliminate, the devastating effects of contango. A panel of experienced commodity traders and investors, including Jim Green of Rosetta Capital Management, Fred Jheon of ETFS Marketing, and John Snell of RMI, will provide tips on tactical commodity investing in light of recent developments. They'll also share their views on current commodity markets.

Investors looking to hedge their exposure to the dollar or to hedge transactions in a foreign currency already know that adding currency to their portfolios as a separate asset class can make some sense in certain circumstances. And the marketplace is diverse--options currently available to investors include single-currency ETFs or ETNs, leveraged currency ETFs, inverse currency ETFs and even multicurrency ETFs. Axel Merk of Merk Funds will provide conference attendees with an explanation of the role of currencies in a long-term portfolio and also will provide his insights on the outlook for the world's largest currency markets.

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