Morningstar Announces 2013 Awards for Best U.S. ETFs and ETF Providers

CHICAGO, Oct. 3, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced the winners of its second annual Morningstar Awards for U.S. exchange-traded funds (ETFs) and ETF providers at its annual ETF Invest Conference in Chicago. The Morningstar Awards recognize the best ETF firms as well as Morningstar ETF Category Winners for two classes of investing objectives, Investor and Trader, based on total cost of ownership and performance.

Morningstar identified Investor and Trader class winners across 40 ETF categories; the category winner is the highest ranked in the category versus its peers, in terms of total cost of ownership and risk-adjusted returns. The ETF providers with the most Morningstar ETF Category Winners in both the Investor and Trader classes within each U.S. category group receive the Morningstar Best ETF Provider award. In this year's awards, iShares had 31 Category Winners and Vanguard received 23.

The 2013 Morningstar Best ETF Providers in four U.S. category groups are:

• International Stock: iShares
• Sector Stock: Vanguard
• Taxable Bond: iShares
• U.S. Stock: iShares

Morningstar distinguishes the investing objectives of retail investors, who tend to invest a smaller dollar amount over a longer time period, and traders, who may invest a larger dollar amount with a greater need for liquidity, and names two ETF winners in each category. A full list of the Morningstar ETF Category Winners in the Investor and Trader classes is available at http://advisor.morningstar.com/products/conference/etfinvest_awards.asp.

"The most notable move we saw this year was iShares replacing Vanguard as the best ETF provider in the U.S. stock category group, though the change had nothing to do with performance or cost. Vanguard's benchmark index changes, announced late in 2012, disqualified many of the firm's U.S. stock ETFs from consideration under our methodology. That said, over the long term, Vanguard's index changes will result in lower index licensing fees that we expect will translate to lower fees for shareholders and enhanced tracking performance," Ben Johnson, Morningstar's director of global passive funds research, said. "We also saw two newcomers among our Investor class category winners. Schwab U.S. Broad Market ETF and Schwab U.S. Large-Cap Growth ETF topped the U.S. ETF Large Blend and U.S. ETF Large Growth categories, respectively. The WisdomTree SmallCap Dividend ETF was the Investor class category winner for the U.S. ETF Small Value category."

The Morningstar Awards for ETFs and ETF providers consider risk-adjusted returns; the ability of the ETF to track its index; and the total cost of ETF ownership, based on an ETF's estimated holding cost, tracking volatility, and market impact cost. The quantitative methodology for the award also recognizes risk-adjusted outperformance within the context of a relevant peer group over the past one- and three-year periods. To be eligible, ETFs must have three years of performance data as of June 30, 2013; more than $100 million in assets; a stated primary benchmark that the ETF has tracked for at least 13 months, and for which Morningstar has performance data; and have traded on at least 240 of the last 250 trading days. To view the awards methodology, please visit http://advisor.morningstar.com/products/conference/etfinvest_awards.asp.  

Morningstar will not include a category unless there are at least five eligible funds in the category, and the category falls in one of four U.S. category groups. Morningstar excluded exchange-traded notes (ETNs) from consideration this year. The awards are designed to recognize excellence in portfolio management. ETNs represent a mere promise to deliver a specified return and thus there is no portfolio management taking place. As a result, Morningstar didn't award a Best ETF Provider for the Commodities category group because of the lack of eligible fund categories to consider for the award. More information about the Morningstar Awards for ETFs and ETF providers is available at www.morningstar.com/goto/ETFAwards2013.  

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 433,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on nearly 10 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has more than $166 billion in assets under advisement and management as of June 30, 2013. The company has operations in 27 countries.

Morningstar, Inc.'s Investment Management group licenses indexes to financial institutions as the tracking indexes for investable products, such as exchange-traded funds, sponsored by the financial institution. The license fee for such use is paid by the sponsoring financial institution based mainly on the total assets of the investable product. Please click here for a list of investable products that track or have tracked a Morningstar index. Neither Morningstar, Inc. nor its investment management division markets, sells, or makes any representations regarding the advisability of investing in any investable product that tracks a Morningstar index.

©2013 Morningstar, Inc. All rights reserved.

MORN-R

Media Contact:
Nadine Youssef, +1 312-696-6601 or nadine.youssef@morningstar.com

SOURCE Morningstar, Inc.