Morningstar Votes for Mutual Funds
"As we do with conventional open-end funds, we call them as we see them," says Dan Culloton, an analyst at Morningstar.
One possible reason for the perception of a negative ETF bias is that "you've had a gold-rush mentality where providers have been launching funds in a lot of very narrowly defined sectors," the Morningstar analyst says. "We tend to be more skeptical of narrowly defined, sector-oriented vehicles, ones that are more volatile, expensive and harder to use.
"If we tend to say a lot of negative things about ETFs, I think you'll see we are consistent with the negative things about conventional funds," Culloton adds.
TheStreet.com compared Morningstar's comments on core, diversified domestic, large-cap blend ETFs (i.e. not narrowly defined, concentrated assets) and their mutual fund counterparts. The comparison revealed more negative comments about the ETFs than the mutual funds, even though several of the mutual funds were underperforming the market. Consider the following:The first ETF on the list described above, ranked by assets, the Vanguard Total Stock Market (VTI) gets a nice write-up. "Vanguard Total Stock Market ETF has it all, literally," Culloton writes on Morningstar's Web site. "It may look a bit sluggish in the future if small stocks surrender the market leadership [but] this fund can still serve as an excellent core holding."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV