Morningstar’s ETF Selection Tool

When I was researching at for small-cap investment (both mutual funds and ETFs) yesterday, I found their ETF selection tool quite convenient.

Simply place the cursor over the investment style you are interested in and click, then a list of ETFs in that category will appear with information such as style, returns, and trading volume.

However what’s missing from the list is what I consider one of the most important factors in determining which to invest for mutual funds: the expense ratio (ER). Though for ETFs, the ERs are generally lower than their mutual fund counterparts, they are still playing a key role when considering my investment choice, not just that the returns matter. In this case, I have to manually click on each ETF and go to their individual page to find out the ER.

The trading volume should also be considered, though it does not have directly impact on the returns of the fund, it affects how much you pay when buying the fund. Generally, the larger the trading volume, the smaller the bid-ask spread. The bid price is the highest price somebody is willing to pay to buy your shares if you want to sell them, while the ask price is the lowest price that someone is willing to sell a stock.

This tool is only available for domestic funds. For international equity ETFs, the list is much longer without detailed categorization.

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