Morningstar's first ETF Invest Conference is raring to go.
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.
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.
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
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.
While there may be nothing new under the sun, the crash of 2008 and the rally of 2009 jolted portfolio construction experts and prompted some changes in how they look at strategically building portfolios. Lessons from the crash will be discussed on one panel, which will feature Vanguard's Sandip Bhagat and Russell Investments' Erik Ristuben, while a separate panel that includes Morningstar Associates' Hal Ratner, Michael Iachini of Schwab, and Rick Ferri of Portfolio Solutions, will discuss the asset-allocation process and how to select the right ETF for the job.
One of the most colorful areas of the ETF universe involves the relatively new segment of hedge-fund ETFs, the oldest of which was launched only in early 2009. Mimicking the Wild West quality of the hedge fund world--but without the massive fees that hedge-fund investors must pay--hedge fund ETFs offer an incredibly diverse set of exposures, ranging from long/short equity to merger arbitrage to fixed-income arbitrage. A panel of experts, including IndexIQ's Adam Patti, iShares' George O'Connor, and Peng Chen of Ibbotson, will discuss how alternative ETFs can improve traditional stock and bond portfolios and will offer suggestions on how to select the right hedge fund ETFs.
Other panels at the conference will discuss the rapidly growing investor interest in options on ETFs, the financials sector, and solutions on the market that can help investors find yield in a low-cost, diversified ETF product.
The conference also will feature an overview of the macroeconomic landscape led by State Street Global Advisors' director of portfolio strategies Dan Farley, an industry roundtable featuring Vanguard's Rick Genoni, PowerShares' Ben Fulton, and ProShares' Joanne Hill, and a wide-ranging discussion on economics, politics and, yes, football (the NFL season is underway, after all) by author and ESPN columnist Gregg Easterbrook. In addition, retired iShares CEO Lee Kranefuss will have a one-on-one conversation with Morningstar's Don Phillips about how ETFs have changed the investing landscape for individual investors, advisors, and the entire fund industry, while a trio of ETF experts and commentators--Morningstar's Scott Burns, Tom Lydon of ETF Trends, and IndexUniverse's Matt Hougan--will share their thoughts on the ETF landscape and offer best practices for investors who use ETFs.
We on Morningstar's ETF team are very excited about the topics that will be presented at this year's conference, and we're looking forward to seeing as many of you there as possible. For those unable to attend the conference, we will be providing a blog that summarizes many of the panels, and next week, we'll also publish longer articles about the themes and insights from the conference.
Robert Goldsborough is an ETF analyst with Morningstar.
Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including Barclays Global Investors (BGI), Claymore Securities, First Trust, and ELEMENTS, for use in exchange-traded funds and notes. These ETFs and ETNs are not sponsored, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs or ETNs that are based on Morningstar indexes.
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