Paul Meisel

What Does Morningstar Have Against ETFs?

I had a similar conversation with my financial-planner sister. Her point -- a good one -- is that many of her clients (think old-money widows) are not sophisticated about the market, so a 5 star fund or broad market index ETF fit their needs. The more focused funds are for more sophisticated investors.

Morningstar clearly caters to the broad investor market and is tied to the success of the fund industry. ETFs are a threat.... and they may not be appropriate for investors who spend a couple hours a year thinking about their financial plans. (Believe it or not that's what some people allocate...)