Advisors who are looking for, say, a domestic equity exchange-traded fund for a portfolio will want to examine potential candidates to see which fund best suits the client's needs.
Aside from checking the basic rules governing the underlying index, they should probably compare the expense ratios, number of holdings, sector breakdowns, top holdings with percentages and yields.
Good luck with that.
Advisors who are considering just a few candidates may find everything they need with one visit to each sponsor's website. But because the various sponsors report inconsistently and often with delays, it is hard to get a clean comparison between rival offerings.
More likely, an advisor will have to make multiple visits just to obtain the desired metrics for a single point in time. Those efforts could actually take several weeks, depending on the ETF providers being considered.
And by then, it could be a stale comparison.
Those who aren't looking for the information exactly when the ETF companies are releasing it may have to compare the yield from the end of the previous month for one ETF against yesterday's yield from another fund. Or one fund's holdings may be up to date, while another's are from the end of last month.
It is an understatement to call these “apples and oranges” comparisons. A better analogy would be fruit salad.
For the most part, expense ratios are fairly stable. When there is a change, ETF providers say they post it promptly.
But what about those other metrics?
DAILY UPDATES? NOT LIKELY
Just three of the top 10 ETF companies by assets -- Invesco PowerShares, State Street and WisdomTree -- update all the previously mentioned statistics daily for their basic domestic equity portfolios.
Here is how the others fund sponsors update each of the statistics for their domestic equity ETFs. Inverse and geared funds are excluded.
Number of holdings: First Trust, Guggenheim, iShares, Schwab and Van Eck all update the number of holdings daily. And ProShares lists all holdings daily but doesn't number the list, so you have to count it yourself or drop it into an Excel file.
Vanguard posts the number of holdings 15 days after the end of the calendar month.
This is because all Vanguard ETFs are classes of its traditional index mutual funds, a Vanguard spokesman says, and the delay protects long-term investors from traders who may try to front-run trades made for index reconstruction.
Sector breakdown: First Trust, iShares and ProShares provide daily sector breakdowns of their equity portfolios. Guggenheim lists some ETF sector breakdowns daily but others quarterly.
Schwab posts sector breakdowns from three to nine business days after the end of the month. Van Eck updates sector weightings monthly a week into the new month.
Vanguard posts sector breakdowns monthly with a 10-day delay, for the reason cited above.
Top holdings with percentages: First Trust, Guggenheim, iShares and Schwab show the top 10 holdings (with percentages) daily.
As noted, ProShares lists all its holdings daily, along with the dollar value of each position, but it doesn't give the percentage of the portfolio represented. You can download the holdings to an Excel file, however, and do the calculations.
Van Eck lists all holdings and percentages daily, but you will have to look at the entire holdings list to see that. The section of the website marked "top 10 holdings" is updated monthly with a one-week delay.
Vanguard reports monthly with a 15-day delay.
30-day SEC yield: Some advisors may prefer a different measure of yield, but at least this metric is standardized. Reporting of it isn't, though.
Schwab, Van Eck and Vanguard post daily. Guggenheim updates weekly but doesn't post yields under 2%.
ProShares updates monthly, three business days into the new month. For iShares equity ETFs, the number arrives five business days after month's end.
And First Trust updates monthly within seven business days of the end of the month.
NOT SO TRANSPARENT
Because ETFs have always been marketed as transparent investments, advisors may wonder why all metrics aren’t posted daily.
Vanguard cites protection of long-term investors as the reason for delaying its reporting. Yet many competitors provide information daily and still seem to be able to deal with attempts by traders to front run.
Other ETF companies cite “industry standards” or delays by data providers, compliance departments or custodians as the reasons for not posting certain numbers daily. But it is clear that data can be delivered daily if there is a will to do so.
Perhaps if advisors and investors, the customers of ETF companies, insist on timely data, they will get it.
Joseph Lisanti, a Financial Planning contributing writer in New York, is a former editor-in-chief of Standard & Poor’s weekly investment advisory newsletter, The Outlook.
This story is part of a 30-30 series on smart ETF strategies. It was originally published on April 20, 2015.
- 10 ETF Winners That May Be Too Hot to Handle
- Dividend Weighting for a Portfolio
- Smaller Cap, Higher Yield? Only in This Sector
- Warning: Bond Funds That Act Like Stocks