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Morningstar has investment experts in 27 offices around the world. We are bringing together their insights into a global Morningstar magazine aimed at all types of financial professionals including advisers. The magazine reflects our global reach, demonstrating the full scope of our independent thinking and original research. In the latest issue you can among other things learn more about the behaviour gap or learn about why Japan is heading in the same direction as Greece.

We’re excited to launch a number of new features. We added a global investment roundup and a new column from John Rekenthaler. In the next few months, we’ll also be launching an interactive tablet version of the magazine.  Access the online Morningstar Magazine

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Gareth Thompson of [codepotato] outlines the essential steps to building–and maintaining–a great financial adviser website. View on Morningstar.co.uk

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UPCOMING WEBINAR: Our ETF experts are ready to answer your ETF questions, no matter how basic or complex

Each month, Morningstar’s ETF experts host a free, online webinar to help professional investors learn more about, and make the most of, exchange-traded products.

This month, the European ETF team will be answering all your ETF questions, no matter how big or small from 3pm on April 24th.

Submit your questions to Hortense Bioy, Jose Garcia-Zarate, Al Kellett and Gordon Rose in advance by emailing ETFQueries@morningstar.com, or you can ask your questions live on the day via the BrightTALK webinar platform.

We’ve already received several questions that will be addressed during the webinar, including how dividends are treated within ETFs and what impact this could have on their performance; what costs are associated with ETFs beyond the total expense ratio; how to tell how actively traded an ETF is; and how to decide which ETF to buy when faced with several products tracking the same index.

Register to attend this free webinar here.

The webinar will take place on April 24th, 3-4pm UK time.

Missed our previous webinars? Catch up here.

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Tony Wickenden of Technical Connection explains the issues that financial advisers should be addressing with their clients following the 2013 Budget

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Join us  today, Wednesday, 27^th March at 3 pm for our live webinar panel discussion on ETFs and Smart Beta Strategies.

To Register: click here.

Panel Members:

– David Blitz, head of quantitative equity research at Robeco

– Ramon Tol, senior fund manager for equities at Blue Sky Group

– Hal Ratner, chief investment officer, Morningstar Investment Management Europe

– Hortense Bioy, director, passive fund research for Europe, Morningstar

Agenda:

– What exactly are alternative beta strategies?

– Are they better than the traditional market cap-weighted approach or just different?

– What are the pitfalls?

– How can these strategies be integrated into the investment process?

To Register: click here.

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Tim Steer won’t buy a stock without meeting company executives.

Tim Steer is manager of the Artemis UK Growth fund and he also runs institutional mandates including the Artemis UK Hedge Fund. He has been at Artemis since mid-2009 having previously managed the UK Alpha fund at New Star. Having first qualified as a chartered accountant he started his investment career as a small-cap analyst for Merrill Lynch and HSBC.

Steer’s Artemis UK Growth fund has a Bronze Morningstar OBSR Analyst Rating. In that fund he uses his accountancy background to analyse each company’s accounts in detail, which he believes can reveal much about its current state and offer a guide to its future potential. In particular, he pays significant attention to the finer detail in accounts, concentrating specifically on the use of provisions, cash flow, revenue recognition, debtors and debtor levels. The investment process is wide ranging and also includes a qualitative rating tool.

Within the investment process he emphasises meeting and gaining a thorough knowledge of a company’s management; indeed he won’t buy a stock without meeting executives. In that context it will be interesting to see Steer interview a CEO from a FTSE company at the Morningstar Investment Conference this May. It will provide an insight, both in terms of what information Steer is looking to gain from the CEO, and in terms of how the CEO views the company’s recent performance and the opportunities going forward. It is a rare opportunity to see a fund manager “in action” and should be an informative and entertaining session.

Tim Steer will be one of many UK investment luminaries speaking at the Morningstar Investment Conference in London this May. See the Morningstar corporate site for more information.

Posted in: Events, IFA News and Commentary, Morningstar, Morningstar OBSR Commentary, Research,

Terry Smith is a well-known personality in the finance industry, having headed up a number of FTSE companies, including Tullet Prebon (TLPR), for which he is currently the CEO. He is an original thinker and has often demonstrated his willingness to bet against the crowd. In November 2010 he launched the 

FundSmith Equity fund, rated Bronze by Morningstar OBSR analysts, which seeks to invest in high quality businesses whose assets are intangible and difficult to replicate, thereby compounding in value over the years. These stocks are often referred to as high quality businesses and are most commonly found in some of the more defensive sectors. Understandably, many of these companies have performed well in recent years in both relative and absolute terms and investors have preferred the safety and predictability of their earnings streams. The question that has consequently often been asked, is whether or not they remain attractive from a valuation stand-point?

Smith considers “value” in a number of different ways, one of which is to compare the companies’ Free Cash Flow (FCF) yield with the normalised yield over time on the long bond. If Smith & Co. can purchase stocks that have a FCF yield equal to or greater than the long bond yield, and that have free cash flows that can grow over time, he believes they  are getting good value—certainly relative to the so-called ‘risk-free rate’ and possibly even in absolute terms.

Using these metrics, Smith argues that the companies in their portfolio are higher quality than the market, based on their return on capital, and have FCF and dividend yields in excess of the market and the long bond. He also strongly believes that these cash flows and dividends will continue to grow. We look forward to hearing his thoughts on why it remains appropriate to continue investing in a portfolio of so-called ‘boring’ companies and what likely outcome investors may anticipate.

Terry Smith will be one of many UK investment luminaries speaking at the Morningstar Investment Conference in London this May. See the Morningstar corporate site for more information.

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Beginning this year, providers of index-tracking UCITS will be required by European regulation to disclose predictions of their funds’ tracking error and tracking difference. Providers will also have to explain any divergence between their predictions and the funds’ actual performance.

Morningstar’s research report, On the Right Track: Measuring Tracking Efficiency in ETFs, examines the factors that influence tracking error and tracking difference in exchange-traded funds (ETFs), and applies those metrics to a selection of 65 ETFs linked to eight popular equity indices.

The key findings of the Morningstar report are:

Hortense Bioy, director of European passive fund research for Morningstar, said:

“Tracking error and tracking difference both play a part as complementary measures for assessing the replication quality of an ETF. As ETFs continue to gain in popularity, there is an increasing need for investors to be clear about these most commonly used metrics. In particular, there seems to be considerable confusion around tracking error, its meaning, key drivers, and calculation. Beyond the definition provided last year by ESMA in its final guidelines on ETFs and other UCITS, we believe that investors would benefit from a harmonised approach to calculating tracking error. Our report intends to open up this discussion.”

For a copy of the full research report, please click here.

Authors

Ben Johnson, Director, Global Passive Fund Research

Hortense Bioy, CFA, Director, European Passive Fund Research

Alastair Kellett, CFA, CAIA, International ETF Analyst

Lee Davidson, ETF Analyst

Posted in: IFA News and Commentary, Morningstar, Research,

We’ve just announced the agenda for this year’s UK Morningstar Investment Conference, May 14-15, which you can view here: http://bit.ly/MICUK2013 

Registration is also now open: http://bit.ly/MICUKinfo

We look forward to seeing you there!

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