Three Things I’m Watching For at Morningstar’s Annual ETF Conference
In two weeks, the fifth-annual Morningstar ETF Conference will take place in Chicago. This year’s choice of venue, the Sheraton Hotel & Towers, reflects not only the growth of the conference but the overall growth and interest in the ETF industry as a whole.
As our agency has provided PR and content marketing services for ETFs since 2008, these industry events are a great way for us to stay on top of what’s happening as well as to see clients and friends in the business. I have a feeling that this fall will see big things for the ETF industry, perhaps beginning with the Morningstar ETF confab.
Two years ago at the event, when the conference took up residence at the Radisson Blu Aqua for the first time, the conference included a presentation from PIMCO about embracing the actively-managed ETF. Fast-forward to today and PIMCO has remained the big winner in the growth of actively-managed ETFs with close to $8 billion in their active ETFs as of mid-July. That is nearly four times that of their closest competitors, AdvisorShares and WisdomTree. While PIMCO has had the most asset accumulation among active ETF sponsors, the reality is that there are many more players today than there were just two years ago.
As we close in on 100 active ETFs in the market, it’s clear that the growth and momentum in that slice of the ETF universe bears watching. Here are three more things I’ll be on the lookout for at this year’s Morningstar ETF conference:
1) Will strategic beta ETFs carve out their own niche or eat away at traditional index ETFs? What some call a mash-up of passive ETFs and active ETFs, these rules-based products that operate under passive mandates are also known more commonly as smart beta. Rob Arnott and his team have owned much of the talk around smart beta with their twist on these products, but the reality is an increasing number of ETF issuers are offering products that provide their own tilt on how indexes are weighted, screened and comprised. Make no mistake, investor appetite is strong for something that is still relatively low-cost, offers broad index exposure, and has the potential for outperformance. In visiting with ETF managed portfolio providers at this year’s event, I’ll be curious to hear what they have to say after the panel on the topic.
2) Can the ETF industry establish a bona fide middle class? There are the behemoths: iShares, Vanguard, Schwab, PIMCO, State Street, Guggenheim and PowerShares among that crowd with Direxion and WisdomTree making an impact. There are myriad fledgling ETF backers who have gotten their own exemptive relief or leveraged the white label platform services of firms like Exchange Traded Concepts and ALPS. Somewhere in between ETF backers like AdvisorShares, RevenueShares, Global X, FlexShares and others are making great strides accumulating assets but not dominating the conversation or diverting too much asset flow from the firms that are leading the panel discussions at the event. A strong middle class for the ETF community gives investors the choice of going with potentially more nimble, more innovative product issuers that have staying power.
3) Who makes the biggest PR splash? Scheduled in mid-September, the Morningstar ETF Conference is in prime calendar position for news to hit. Will we hear more about exemptive relief applications for actively managed exchange-traded mutual funds (ETMFs)? Already, iShares, American Funds and State Street have joined Eaton Vance in filing exemptive relief applications for this structure. Or, will there be news of one of the “middle class” ETF issuers being gobbled up by a larger player?
If you are going to the conference, come say hi. If you are following along on Twitter (#MStarETFUs), you can find me at @JoeAnthony. I’m ready to hear what’s next for ETFs.