Tag Archives: IndexUniverse ETF tracking service

Buying an ETF for More Than The Ticker

Courtesy of Forbes Contributor Ari Weinberg

July 30

If you invest in exchange-traded funds, you’ve probably heard about the forthcoming service from IndexUniverse.

If you really follow ETFs, you’ve probably wondered what took them so long.

Years in the making, publisher IndexUniverse is finally rolling out its own ratings and analysis service for ETFs. Currently in commercial beta for financial advisers, institutions and other professionals, ETF Analytics takes a different tack than uber, fund-rating firm Morningstar (MORN).

IndexUniverse rolls up its individual ETF analysis into both letter and number grades, while leaning on its current ETF classification system for sectors, themes, styles and more. The service is launching with evaluations on all equity-based ETFs and will eventually cover fixed income, currencies and alternatives.

But Zagat of ETFs it’s not. And, at an initial price of $3000, the service is not for the faint of heart or light of wallet.

For top-level insight on what an individual investor can glean from the new product, I sent over a few questions to Matt Hougan, President of ETF Analytics for IndexUniverse.

AW: What is the biggest or most common mistake investors make when evaluating an ETF?

MH: Just buying tickers.

We see far too many investors just buying the ETFs they are familiar with, or trusting how ETFs are marketed, without looking under the hood.

Take the iShares FTSE China 25 Index Fund (FXI). It has the bulk of the assets for ETF investing in China. But the truth is: It does a terrible job capturing China. FXI has no exposure to technology and very little exposure to consumers.  Eighty percent of the portfolio is invested in old-school, ex-government firms, with none of the entrepreneurial, middle-class-driven growth that most investors want from China.

A fund like SPDR S&P China (GXC) gives you much better exposure, but investors don’t bother to look.

AW: Should buyers differentiate between products for “traders” and “investors?” Continue reading