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S&P Capital IQ Marks Five Years Of Providing Equity ETF Research

NEW YORK, Oct. 24, 2013 /PRNewswire/ -- Earlier this month, S&P Capital IQ marked the fifth anniversary of the launch of its holdings-based equity Exchange-Traded Fund (ETF) research product, created to help advisors and their clients more effectively navigate the rapidly expanding universe of ETFs.  


At the time the new research product was introduced, there were 433 equity ETFs in the market.  By year-end 2008, U.S. exchange-traded products of all types had about $540 billion in assets, according to BlackRock.  Less than five years later, total assets had nearly tripled to $1.6 trillion, with S&P Capital IQ providing research on 791 equity ETFs through its MarketScope Advisor® product. 

"When we launched our ETF research we believed that our holdings-based approach offered significant advantages over traditional performance-based research," said Todd Rosenbluth, Director of ETF and Mutual Fund Research at S&P Capital IQ.  "This was predicated on our view that advisors and their clients value transparency – they need to know how these funds and their indexes are constructed, risk/ reward traits of the holdings, and cost factors—to understand how an individual ETF might fit into an overall portfolio.  As ETFs have proliferated and grown increasingly complex, we are more convinced than ever of the need for transparency and the value of our approach."

S&P Capital IQ's ETF reports and thematic research have met with strong interest from the wealth management marketplace since their introduction.  The research is widely used by a number of wirehouses and registered investment advisor (RIA) platforms, including S&P Capital IQ's MarketScope Advisor®.

S&P Capital IQ employs a quantitative methodology in analyzing equity ETF holdings, drawing on the company's broad-based equity research capabilities that includes global fundamental STARS coverage of over 1,500 stocks.  It then assigns an overall recommendation to each ETF:  Overweight, Marketweight, or Underweight.  S&P Capital IQ's Overweight ranked ETFs are up an annualized 20.7 percent since launching in mid-October 2008 through September 30, 2013, while the S&P 500 ™ Index is up 13.6 percent. ETFs ranked Underweight are up just 4.2 percent.

A further benefit of the holdings-based approach is that it allows S&P Capital IQ to assign a rank to newly introduced ETFs without the need to wait for the funds to establish a three-year track record.  There are 166 equity ETFs that have launched since October 2010 (with less than a three-year record) and ranked by S&P Capital IQ.  Collectively they have over $36 billion in assets.

"The ability to rank new ETFs is particularly important in a market that is as fast-changing as ETFs.  Many clients are not waiting for an ETF to hit a certain anniversary before investing," Rosenbluth said. 

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