Morningstar announced the winners of its second annual Morningstar Awards for U.S. exchange-traded funds (ETFs) and ETF providers at its annual ETF Invest Conference in Chicago.
The Morningstar Awards recognize the best ETF firms as well as Morningstar ETF Category Winners for two classes of investing objectives, Investor and Trader, based on total cost of ownership and performance.
Morningstar identified Investor and Trader class winners across 40 ETF categories; the category winner is the highest ranked in the category versus its peers, in terms of total cost of ownership and risk-adjusted returns. The ETF providers with the most Morningstar ETF Category Winners in both the Investor and Trader classes within each U.S. category group receive the Morningstar Best ETF Provider award. In this year's awards, iShares had 31 Category Winners and Vanguard received 23.
The 2013 Morningstar Best ETF Providers in four U.S. category groups are:
- International Stock: iShares
- Sector Stock: Vanguard
- Taxable Bond: iShares
- U.S. Stock: iShares
Morningstar distinguishes the investing objectives of retail investors, who tend to invest a smaller dollar amount over a longer time period, and traders, who may invest a larger dollar amount with a greater need for liquidity, and names two ETF winners in each category.
"The most notable move we saw this year was iShares replacing Vanguard as the best ETF provider in the U.S. stock category group, though the change had nothing to do with performance or cost. Vanguard's benchmark index changes, announced late in 2012, disqualified many of the firm's U.S. stock ETFs from consideration under our methodology. That said, over the long term, Vanguard's index changes will result in lower index licensing fees that we expect will translate to lower fees for shareholders and enhanced tracking performance," Ben Johnson, Morningstar's director of global passive funds research, said in a statment.
"We also saw two newcomers among our Investor class category winners. Schwab U.S. Broad Market ETF and Schwab U.S. Large-Cap Growth ETF topped the U.S. ETF Large Blend and U.S. ETF Large Growth categories, respectively. The WisdomTree SmallCap Dividend ETF was the Investor class category winner for the U.S. ETF Small Value category," Johnson said.