Kevin S. Price

Morningstar's 'Vastly Superior' ETF Research?

Milo--In noting that it was "too easy," I tried to acknowledge that the single instance of XLF should not be viewed as indicative of Morningstar's entire effort. But it is reflective of the hubris of the entire undertaking, one in which consumers of this information have to hope the whole (the ETF fair value estimate) is worth more than than the sum of its parts (the individual stock fair value estimates). I don't see it working that way--and I don't think this is a particularly useful of thinking about ETFs anyway. For the vast majority of investors, they should be part of long-term asset allocation strategies, not the sort of gun-slinging implicit in Morningstar's construct.

In any case, the argument of this post isn't contingent on what happens to XLF in the near term. I just threw it in to be a little extra snarky. That may sit better with some readers than others, but it doesn't invalidate the overarching logic of the post.