Another reminder of the growth of the exchange traded fund business was the increased presence of ETF providers at Morningstar’s annual investment conference, held recently in Chicago.
The first thing I noticed when I walked through the entrance was the size of the exhibit hall and the number of companies exhibiting compared to prior years. There were many new names looking for attention, especially ETF providers.
And size matters. It was immediately clear that many fund companies are confident in their current positioning in the marketplace as could be seen by the amount of money, people and space they put into their exhibit booths.
Big ETF names, such as iShares, BlackRock’s ETF business, had a huge presence; lights, big screens and tables to park and chat. They were also making a statement by taking pictures of people at their booth and tweeting their comments and pictures on their Twitter page. Not to be outdone in the social networking game, Morningstar was also tweeting like crazy.
It was also clear some fund companies are being left behind. I started at Fidelity in 1983 and enjoyed seeing the growth of the business. However, it was a bit sad to see some small, unattended, nondescript booths of mutual fund companies of the past sprinkled throughout the exhibit hall. Times are changing in the fund business. If mutual fund companies grow too complacent, even in their efforts at showcasing their name brands, ETF providers may continue to chip away at mutual funds.
Morningstar, the hands-down leader in fund research, had a spaceship-like layout in the middle of the exhibit hall. They made it inviting so attendees could talk, sit and relax. It was clear Morningstar intends to continue to “protect” advisors by increasing the quality and the research they provide. Joe Mansueto, founder of Morningstar, also mentioned that they may look at providing a service that would rate advisors, but the news was met with mixed emotions.
Morningstar’s effort in the ETF arena is increasing. Scott Burns, who heads ETF research for Morningstar, leads a smart, energetic team. This ETF group has respectfully built their own following during the ETF expansion while pulling away from the fund “mother ship.” However, with conventional mutual fund assets still at around ten to one over ETF assets, mutual funds still pay the bills at Morningstar. But guys like Mansueto and Burns have a good record of seeing changes before they actually occur.
The content was excellent. Bill Gross stole the show with his continued call for U.S. investors to “get out of Dodge.” This link will give you a great sense of what you missed: Morningstar Conference Highlights.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.