The popularity of exchange-traded fundsis growing rapidly due to their low operating costs and the benefits they provide by helping investors increase their diversification. Beginning investors can use ETFs as an alternative to mutual funds or individual stocks to gain exposure to certain regions or sectors.
Typically, exchange-traded funds have been index funds, meaning they closely track an index such as the S&P 500. As the ETF market has grown, more have become available. Exchange-traded funds that invest in commodities, bonds or currencies can now be traded.
Like all investments, you should perform adequate research before investing in exchange-traded funds. Information on ETFs is becoming more readily available, but it is still not as abundant as data on traditional mutual funds. There are several sites that now focus strictly on providing ETF research and data, which complement sites such as Morningstar.com, which offers data on a wide range of investment offerings.
The ETF Database is a website that caters specifically to ETF research. It provides data on pricing, asset class, size and style, and region, as well as trading data. The fundamental data for each exchange-traded fund is brought up by entering the ticker symbol in the search box on the home page. The holdings section offers the top holdings, along with a breakdown of the asset allocation. The sector, market cap, region and country breakdowns are particularly useful if you want ETFs to add diversification to your portfolio. The ETF factsheet is also available.
For investors looking to do basic technical analysis, the website provides a few charts, including a simple line chart, an intraday chart, a candlestick chart, a directional bar chart and a high/low/close chart. In addition, there are several technical indicators provided.
ETF Database is one of the few sites that offers a news section completely dedicated to exchange-traded funds. Furthermore, you can sign up for a free daily newsletter that will send tips and strategies, the latest news, and resources directly to your inbox.
The site offers several tools, including an ETF screener, ETF country exposure, ETF stock exposure, and a mutual fund-to-ETF converter. These tools are meant to help you choose the appropriate ETF for your portfolio. The country and stock exposure tools will show you the countries or stocks to which certain ETFs have high exposure, allowing you to invest in areas you are lacking or eliminate portfolio redundancies.
If you find that the data and tools offered at the site for free are not complete enough for you, an ETF Database Pro subscription is offered for $199 per year ($19 per month). It includes an ETF Edge monthly newsletter, ETF category reports, model portfolios and analyst Q&As. A Pro screener with the ability to export to Excel is also included in the Pro package.
XTF.com is another website that provides data exclusively for exchange-traded funds. According to their website, XTF’s proprietary ratings methodology covers 100% of the U.S. exchange-traded products markets (as of December 6, 2010).
The main summary page for each ETF provides general information such as geography, asset class, capitalization and primary exchange. The fund holdings page available at XTF.com is not as comprehensive as the one provided by ETF Database. However, news headlines are offered for each ETF. Investment metrics such as risk-adjusted performance, standard deviation, earnings yield and dividend yield are accessible to premium subscribers ($39 to $99 per month).
The marketplace tab lists up-to-date statistics on the ETF market. Furthermore, you can use this page to filter ETFs by market cap, net inflows, net outflows, trading volume and yield. Heatmaps show the performance of ETFs broken down by geography, asset classes and sectors, industries, commodities and currencies.
One of the best sections of XTF.com is the education center. Investors interested in learning more about how ETFs work should make use of this resource. The education center does a superb job of comparing mutual funds and ETFs, as well as summarizing the different types of ETFs and their investment strategies. Just keep in mind that this site caters to ETFs and, therefore, may not fully describe the advantages that traditional mutual funds may offer.
Morningstar has been a leader in fund research and analysis for a number of years. Their website devotes a section to exchange-traded funds that provides news articles, ETF discussion boards and ETF performance tables. You can also register for ETF webcasts, and the site offers numerous video reports on ETFs.
Most of the data that Morningstar.com provides for mutual funds can be found for ETFs. The performance and ratings and risk sections each provide a Morningstar rating. The top 25 holdings are presented along with their sector, country and percent of net assets. The site also offers a tax section that shows the pretax return, tax-adjusted return, category rank and tax-cost ratio. Charts are available that allow you to overlay various benchmarks or other ETFs, a useful tool to compare relative performance.
Morningstar.com recently launched an ETF screener that incorporates data on 1,000 ETFs. The screener is still in beta but is provided free of charge.
Lastly, filings such as the prospectus and annual reports are available for download free of charge.
MSN Money offers a section for ETF data. The information provided in the quote section includes bid and ask, top holdings and an intraday chart. MSN Money also has an ETF message board where you can discuss ideas with other investors interested in ETFs.
The options section provided by MSN Money lists relevant information for all options traded on the ETF in question. Data is provided for the next six months.
The top performers section is the best among the four websites discussed in this column. It presents the top-performing ETFs, and you are able to filter each according to fund family and category. After selecting the appropriate family and category, you can sort the ETFs by Morningstar rating, last price and performance over periods ranging from one week to five years.
The website also provides historical charts for ETFs. Technical overlays such as Bollinger bands and moving averages are available. The data provided goes back to the inception of most ETFs.