New Analytical Tools for ETF Investors on Morningstar.com

We recently introduced a number of new features on our ETF data report pages, so that investors can find what they need in one place. In this article, we explain how to use the new information on these report pages, and highlight the most notable upgrade--the ability to compare an ETF's metrics with those of its category, benchmark, or other funds, including mutual funds.

You can check out these report pages by typing an ETF name or ticker in the Quote search box at the top of any Morningstar.com page. On each ETF quote page, above the last price, there is a gray horizontal bar that lists the report page sections, such as Chart, ETF Analysis, Performance, Ratings & Risk, and Portfolio. Some of the new features in those sections are highlighted below:

Portfolio: Introducing Portfolio Data for Bond ETFs
We now provide detailed portfolio data for both stock and bond ETFs. For example, investors interested in some of the ETFs highlighted in Tim Strauts' recent article Five ETFs With Low Interest-Rate Risk and High Yield can visit the Portfolio section of those funds to find bond statistics (such as average effective duration and average credit quality), and a breakdown of each fund's holdings by credit ratings, bond sectors, coupons, and maturity.

All of this data is presented along with benchmark and Morningstar category averages, so investors can see where a fund is making specific bets. You can also compare funds by swapping out the benchmark data for an ETF or mutual fund of your choice by using the benchmark dropdown menu at the top of the page.

For example, one of Tim's picks is PowerShares Fundamental High Yield Corporate Bond (PHB). We can compare this fund with a market-cap weighted high-yield fund such as  iShares iBoxx $ High Yield Corporate Bond (HYG) to see how different the two funds are. Premium Members can also view and  download the fund's complete holdings, with weightings, maturity dates, coupons, and yield to maturity information.

On the equity side, we now have more style details, value and growth measures, and geographic exposure. Late last year, the first value emerging-markets ETF launched,  Global X Russell Emerging Markets Value ETF . Although this fund sounds like an attractive way to gain exposure to emerging markets, when we check the portfolio, we see that it has a large  29% position in Russia (country-level portfolio data is a benefit of Premium Membership), whose stock market is very volatile and highly leveraged to oil prices. The fund also has a 50% position in energy. For international ETFs, we recommend that investors check the portfolios before investing, as international markets, especially emerging-markets countries, can have very concentrated exposures in certain sectors or companies.

Ratings & Risk: New Upside & Downside Capture Ratio
A new feature in the Ratings & Risk section of our ETF data reports is the Upside & Downside Capture Ratio, which shows if the fund outperformed or underperformed when its benchmark was up or down.

If an upside capture ratio is over 100 (or below 100), that means the fund generally outperformed (or underperformed) the benchmark during periods of positive returns for the benchmark. Conversely, if a downside capture ratio is over 100 (or below 100), that means the fund generally underperformed (or outperformed) the benchmark during periods of negative returns for the benchmark.

This data point is a nice complement to standard deviation, which does not indicate if the volatility is more biased on the upside or downside. If we look at 5-star ETF  Rydex S&P 500 Pure Growth (RPG), we see that its 3-year upside ratio is 131 and downside ratio is 104, better than the large-growth category's corresponding figures of 120 and 109.

At the top of this section are the ETF's MPT Statistics, which indicate the index that shows the closet fit to the performance of the fund. This is useful for investors interested in using ETFs for asset allocation, especially when using ETFs that don't track a common market-cap, size, or style index. For example, although  PowerShares FTSE RAFI US 1000 (PRF) may seem like a large-value fund, we find that its best-fit index is actually a mid-cap value index.

Performance: Compare an ETF's Performance Against Other ETFs or Mutual Funds
The performance section provides annual and trailing return charts and quarterly and monthly return tables, and allows investors to add other funds or benchmarks for side-by-side comparisons (click the "Compare" button, which is located on the upper right corner of the Annual Return chart). There is also a more detailed monthly premium/discount chart (in the "Price" subsection), which provides the annual average premium or discount, and the annual maximum premium and discount.

Distributions: Check If a Fund Has Made Capital Gains Distributions
This new section provides the breakdown of a fund's annual distribution by income, capital gain, and return of capital. It includes four years of data, so investors can check the distribution trends for dividend funds, bond funds, and other yielding funds. And while most ETFs generally do not pay capital gains, ETFs that use cash creations and redemptions (as opposed to baskets of shares) can incur capital gains if there is a large redemption. These types of funds include those that hold derivatives, such as leveraged funds and currency funds, and certain international funds, which are required by local regulators to use cash creations and redemptions. Investors can check for historical capital gains distributions in this section.

Fees & Expenses: See How an ETF Compares Against Its Category Average
Finally, in the Fees & Expenses section, investors can see details about the fund's structure, and find the Morningstar category average expense ratio (which is the average of both open-end funds and ETFs).

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Disclosure: Morningstar licenses its indexes to certain ETF and ETN providers, including BlackRock Asset Management, 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.