What happens if everyone indexes?

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<p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Christine Benz:&nbsp;</strong>Hi, I'm Christine Benz, director of personal finance for Morningstar. As assets flow into passively managed products, concerns have cropped up about some unintended consequences. Joining me to discuss the legitimacy of these concerns is Alex Bryan. He's Morningstar's director of passive strategies research for North America.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;">Alex, thank you so much for being here.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Alex Bryan:&nbsp;</strong>Happy to be here.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>It's good to have you in person, too, for a change. Let's talk about some of the things that we've seen swirling around ETFs and index funds. As they've grown, some market watchers have voiced concerns that there could be these unintended consequences. So, a biggie that we often hear is that somehow the flow of assets into indexes will cause the markets to be less efficient. It'll cause these, sort of like, market dislocations. Let's talk about just the thesis of why things might work that way.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Sure. So, one of the concerns is that as more and more people invest in index funds, and more and more active managers kind of drop out of the market, there's fewer people that are dedicated to doing fundamental analysis on individual securities, and more and more people kind of buying and selling the entire market. In that case, if everybody pulls money out of the market, they may throw out the good stocks, the bad, and that could potentially cause more mispricing in the market than if you have more fundamental stock-pickers doing research and figuring out what each of these stocks are worth. So, that's the concern.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>And the mispricing would be a problem if I'm an index fund investor, because I could end up in some massively overvalued stocks, or ...?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>That's a concern. Yeah. So, if the market is not efficiently priced, then you could end up owning big stakes and stocks that are overvalued. This was a concern back in the late 1990s when tech stocks were close to 40% of the S&amp;P 500 and those stocks were pretty overvalued. And so, there's that risk that if the markets aren't efficiently priced, you could end up owning a lot of things that are quite a bit expensive.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>So, is this something I should be worried about? And let's start with the perspective of if I'm a passive fund investor, but also, how about for active fund investors?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>So, I think it's a concern that I think gets overblown. It's kind of this theoretical discussion that comes up in academic circles. What if everybody were to index? What happens then? I think it really depends on who's dropping out of the market. That's number one. So, if the people who are dropping out of the active market are managers who are less skilled, and I think that's more likely the case ...</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>Probably something we're seeing right now, right?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Exactly. If investors are kind of fed up with years and years of underperformance, and those poor managers drop out, the market could arguably become more efficient, because the managers who are left who are doing the research are arguably more skilled. So, that's one thing I would mention.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>The second thing is, although index funds have a pretty large share of total assets that are invested in managed funds, about 40% in the U.S., their share of trade volume is much lower. And that's because turnover in index funds tends to be a lot lower than the turnover ...</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>They're not trading.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Exactly, they're not trading quite as much. Price discovery happens on the margin when shares trade hands. So, if index funds are accounting for a much smaller share of the overall trade volume than they are of total asset ownership, then actually active managers are still driving most of the price discovery that's happening. So, I think we're a long way from this being a problem. It's not to say that it couldn't be a problem at some point, but we're not there yet. And if we ever were to get to that point where there did, you know, become more mispricings, well, then active managers should start doing better and I think there will be this equilibrium that the market finds where people might shift back to active and back and forth until we find that equilibrium.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>That's what active managers are definitely helping, I know. Let's talk about another concern. You think this one is a little more legitimate. And this is in the case of indexes where maybe those securities are a little less heavily trafficked, where there is a reconstitution of an index fund that's tracking that space, that there can be higher transaction costs. Let's walk people through how this works, when index fund makes changes how that causes funds to have to play catchup.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>So, whenever an index fund reconstitutes, so when there's a &ndash; let's say, stocks that are removed from an index, well, everybody who tracks that index, like the S&amp;P 500, has to sell those securities at about the same time regardless of the price that they get. Now, what that tends to cause is, it causes the prices of those stocks to drop when they're removed. Similarly, stocks that are added to the index see a price pop when they're added, but oftentimes, the index investors are getting the less favorable prices because they're not able to buy those newly added securities until after the price goes up or sell until after the prices have gone down. So, this can cause the performance of the index to be a bit less attractive than it otherwise would be if it weren't forced to buy and sell on these predefined dates. And that's one of the reasons why a firm like Dimensional Fund Advisors doesn't like to track an index. It follows a broad market ...</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>To take advantage of these sorts of issues.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Exactly, exactly. So, that's the concern. And it's, as you mentioned, more acute problem with less-liquid assets, like small-cap stocks, like high-yield bonds, that's where these costs tend to be more pronounced.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>So, what's the solution? Assume I want to track, say, a small-cap stock index, or I want that type of exposure in my portfolio, how should I address it to not be disproportionately burned by this problem?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>So, I think there's one or two solutions. Number one, you could just own a total market index, where you're kind of on both sides of these trades, and it's a wash. So, if I own something like the Vanguard Total Stock Market Index, yes, there might be some stocks that go into and out of the S&amp;P 500 that are negatively impacted by that, but I already own them if I own the Total Market Index. So, I think that's one solution.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;">Now, if you want specific exposure to an area like small-cap stocks or high-yield bonds, I think it's a good idea to look for funds that are a bit less popular that have fewer assets tied to them, because that means that when there's changes to those&nbsp; indexes, there's less market pressure on the prices of those stocks, because there's less dollars going into or out of them. So, I think that's one thing to look for.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;">The second thing you want to look for is indexes that are taking steps to mitigate unnecessary turnover, because a lot of times, well, turnover is costly and a lot of times it doesn't add a lot of value. So, if you, let's say, you're a small-cap stock, and you migrate slightly into mid-cap space, well, that stock is probably going to have very similar performance to other small-cap stocks. So, it may not be worthwhile selling that. It may be OK to hold on to that. So, I think a fund like, let's say, Schwab U.S. Small Cap ETF. That's a less popular fund, and it's one that tracks an index that applies wide buffer zones to try to mitigate these types of unnecessary turnover trades.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>So, the buffer zone is there to keep things from slipping back and forth out of the small-cap space?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>That's right.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>Let's talk about the last potential concern related to the growth of indexing. And that is that it could cause businesses to be less competitive, or it could cause the complexion of industry to be less competitive. Let's talk about how that would happen, why that would happen as a result of the growth of indexing.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>So, the concern is that index investors, asset managers who manage these, they own all the companies in the market. So, they don't necessarily have the same incentive to pressure managers to maximize the value of any single company. They may not be as concerned about one firm winning at the expense of another because they want to see all the firms in industry win. So, that's the concern is that this could potentially harm consumers, because it might create some anti-competitive behavior in the same way that if you see consolidation in a given industry, there might be less competition. The concern is that that same effect would happen if you have a couple of big institutional investors like BlackRock and Vanguard own all the airlines, for example.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>Right. Right. So, there's been some academic work on this topic, looking at a couple of different industries. You have written about this topic before as have some of our other colleagues. Do you think this holds water? Should people be concerned about this?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>I think it's a weak argument for a number of reasons. Number one, I think managers of most companies are heavily incentivized to maximize their own shareholder--the value of their own company.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>So regardless of external pressures?</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Regardless of external pressures, regardless of who owns the firm. I think managers in most companies, because they're paid very heavily in stock of their own companies and their bonuses are tied to their earnings and to their revenue, they're not really concerned about maximizing the industry's profitability, they're concerned about maximizing the results for their own firm. So, I think that's the first thing.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;">The second thing is that this argument makes this assumption that it's always in the firm's best interest or almost always in the firm's best interest to compete more aggressively. And I think oftentimes, it's just not the case. If GM, for example, were to cut prices on its automobiles, it knows that Ford is likely going to react and both companies will be worse off. So, I think the ownership of a company doesn't affect the optimal competitive strategy.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;" align="justify"><span style="text-align: left;">The other thing to note is that most index managers aren't really talking competitive strategy or pricing when they do engagements with their portfolio companies. They're more concerned about corporate governance, things like making sure that the board has proper experience, that the company is taking adequate steps to manage risk. They're not really talking about what business strategy the firm should pursue.</span></p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;">&nbsp;</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;" align="justify"><span style="text-align: left;">The other point I would note is that even if asset managers did want to influence corporate strategy, it's not obvious that they would want to maximize profits at the industry level, because they own all companies across all industries. So, higher ticket prices in the airline industry could actually hurt their holdings in the hotel industry. So, they may not necessarily want that. So, it's not obvious that index ownership is going to lead to less competitive behavior. I think at this stage, the argument is interesting, but I think it's a more academic argument and the empirical evidence really isn't persuasive as of yet. So, I think there's more work to be done in this area.</span></p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>Put that one on the backburner for now. Alex, it's always great to get your insights. Thank you so much for being here.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Bryan:&nbsp;</strong>Thank you for having me.</p> <p style="margin: 7px 7px 13px; padding: 0px; border: 0px; font-variant-numeric: inherit; font-variant-east-asian: inherit; font-stretch: inherit; font-size: 12px; line-height: inherit; font-family: Verdana, serif;"><strong style="margin: 0px; padding: 0px; border: 0px; font-style: inherit; font-variant: inherit; font-stretch: inherit; font-size: inherit; line-height: inherit; font-family: inherit;">Benz:&nbsp;</strong>Thanks for watching. I'm Christine Benz for Morningstar.com.</p>

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19/05/2022  Worries about inflation’s toll on earnings sparks Wednesday’s 4% plunge, but stocks are now far undervalued.
Value strikes back: How to manage style in your portfolio
18/05/2022  One of the big themes of the year has been the value comeback. What is behind this resurgence after a pretty dismal period, and should your portfolio be tilting in its direction?
Is it time to recession-proof your portfolio?
11/05/2022  Here's what investors who are worried about a recession should consider today.
Morningstar Best Ideas List: An undervalued play in telecom
11/05/2022  Morningstar analysts have identified TPG telecom as the most undervalued telecom stocks in the ASX 200 detailing multiple catalysts for earnings recovery and growth.
Bill Browder: A scared Putin will only escalate the conflict
29/04/2022  Exclusive: Hermitage Capital Management CEO Bill Browder talks Putin, Russia, and the next six months for Ukraine
5 risks facing the US market right now
28/04/2022  Inflation, rising interest rates, geopolitical risks, and other things to keep your eye on.
Buffett and Berkshire in 2022
27/04/2022  Morningstar's analyst talks about the Buffett's recent deals, what the stock is worth, and whether Berkshire will pay a dividend any time soon.
Fair value upgrades on the table: Morningstar resources update
31/03/2022  Supply disruptions following Russia's invasion of Ukraine are forcing analysts to consider the possibility elevated prices persist.
Bank outperformance speaks to positive trajectory: Morningstar
30/03/2022  Rising interest rates, strong economic growth and cheaper valuations are driving banking stocks ahead of the broader market.
Stock vs stock: Netflix and Disney
28/03/2022  Where are entertainment and streaming services headed?
Morningstar Best Ideas List: WiseTech looks cheap after tech selloff
24/03/2022  Problems in global supply chains are an opportunity for WiseTech as its logistics company customers move to replace old software.
First fires, then floods: How listed insurers are weathering extreme events
23/03/2022  Markets focused on floods and bushfires are missing how insurers are cutting costs, doing more digitally and are looking down the barrel of a lift in investment income.
Don't get 'whipsawed' by false promises of peace in Europe
17/03/2022  Morningstar Investment Management's global CIO Dan Kemp explains why well-intentioned investors desperate for peace in Europe are making dangerous market calls
Morningstar Best Ideas List: Kogan to hold own in faceoff with Amazon
15/03/2022  Knowledge of the local market, strong branding and a growing subscription service should see the undervalued retailer retain market share in the rapidly growing online sales category, says Roy Van Keulen.
"There's been a big rotation in markets": Value surges as growth stumbles
08/03/2022  Higher inflation, rising interest rates and booming commodity markets are driving a major rotation away from the post-pandemic winners, says Tim Murphy, Morningstar director of manager selection.
Afterpay's rivals set for battle with rates and regulators
03/03/2022  Regulators are likely to be less lenient now the buy-now-pay-later sector is part of the fabric of Australian payments.
Industry champions on the cheap: Emerging markets at the Morningstar Investment Conference
23/02/2022  Strong commodity prices, cheap valuations and a head start on interest rate hikes means emerging markets are set for strength, says Dr. Joseph Lai of Ox Capital.
The Russia crisis is heating up, but you need to stay cool
23/02/2022  A belligerent speech from a president signalled the start of the latest phase of Russian agression last night, causing markets to wobble and investors to wonder.
Peter Warnes on FAANGs, investing in Asia and bond market smoke signals
15/02/2022  In an extended interview, Morningstar's Peter Warnes discusses the bear market in US technology stocks, interest rates and growth and his approach to investing outside the US and Australia.
Weighing up Magellan Financial Group after Douglass surprise exit
13/02/2022  Morningstar equity analyst Shaun Ler explains why he see valuation upside high for MFG even as shares lose steam.
Year of the Tiger: What's next for Chinese stocks
31/01/2022  The Chinese lunar year is almost over, and what a ride it's been. Morningstar speaks to JPMorgan Asset Management strategist Mike Bell about what's ahead. 
What to do (and not do) in a volatile market
23/01/2022  Christine Benz discusses how investors should handle the turmoil, whatever the life stage.
Bare shelves only a short-term hit to Coles and Woolies
18/01/2022  Empty shelves will negatively impact supermarkets in the second half of fiscal 2022 but the impact on long-term earnings is minimal, says Morningstar analyst Johannes Faul. 
Morningstar's outlook for 2022
17/01/2022  Bank earnings, house prices and China risk: Our experts and analysts discuss what they've got their eyes on in 2022.
Morningstar's Year in Review 2021
24/12/2021  Our experts and analysts weigh in on what mattered for investors last year.
"A bump in the road" as Magellan loses major client
21/12/2021  New products, lower fees and a portfolio of undervalued stocks set to help the fund manager right the ship. 
What role should Bitcoin play in your portfolio?
10/12/2021  And how does it match up against gold?
Years of demand remain for Australian coal producers
10/12/2021  Australian miners to be among the last standing as coal use fades.
Year-end portfolio rebalancing: What you need to know
08/12/2021  Rebalancing your portfolio is one of those beneficial habits that’s easy to let slide. But year-end is an ideal time to check how your portfolio is tracking against your target asset allocation. 
3 quality names from Stewart Investors
03/12/2021  The gold-rated fund manager shares three ideas with long-term potential.
Silver linings for investors amid the climate stalemate: COP26 debrief
01/12/2021  Long-term investor sees opportunities where businesses are moving towards a zero-carbon future faster than governments.
6 qualities of great index funds
30/11/2021  To understand your fund, get to know its underlying index.
Lazard's 3 top picks for the energy transition
29/11/2021  These companies are set to profit from the move to clean energy, says Lazard.
An uneven energy transition leaves room for coal and gas: COP26 debrief
24/11/2021  The results of the COP26 climate summit suggest coal demand is likely to persist for longer than expected.
What rising inflation means for Australian investors
17/11/2021  And how investors can protect their portfolios.
6 inflation-tough stocks for global investors
08/11/2021  Morningstar thinks these moaty companies will remain resilient in the face of inflation and ongoing supply chain challenges.
Risk/reward equation still looks good at Westpac
05/11/2021  Morningstar maintains fair value despite a fall in margins and slower progress on cost reductions.
These aren't the Bitcoin ETFs you're looking for
19/10/2021  These new US-listed exchange-traded funds will invest in bitcoin futures, not bitcoin itself.
ESG funds don't underperform - but nor do they outperform
15/10/2021  The ESG outperformance narrative is flawed, new research shows.
Building investment portfolios in a low interest rate environment
06/10/2021  Investors may need to hold more growth assets over the coming years, says Morningstar's Jody Fitzgerald.
Covid impacts still being felt in real estate and tech: Reporting season roundup
01/10/2021  And how G8 Education and Link Administration are positioned for long-term success.
Look to Credit Corp for a leading indicator of economic health: Reporting season roundup
30/09/2021  What Reporting Season August 2021 told investors about the health of the financials sector.
Cause for optimism at a2 Milk and Invocare: Reporting season roundup
28/09/2021  a2 milk is an opportunity to be greedy when others are fearful.
Post-covid normalisation is underway in healthcare: Reporting season roundup
23/09/2021  Covid's winners and losers are returning to their prior trajectories. 
One of the most underappreciated dangers of investing
21/09/2021  Sequence-of-returns risk matters for both retirees and savers. Here's why. 
REITs recover pandemic losses: Reporting season roundup
20/09/2021  Analysts expect the sector to recover to pre-Covid trading levels once borders reopen.
Australian banks face margin pressure amid low rates: Reporting season roundup
15/09/2021  Rising customer deposits and access to cheap funding helped Australia's banks stave off net interest margin pressure, but analysts see warning signs.
Greenwashing explained
14/09/2021  Morningstar's Hortense Bioy on how to spot greenwashing and how to avoid it.
Earnings down as private money circles infrastructure: Reporting season roundup
13/09/2021  Utilities and infrastructure names battle the impact of covid as private equity and pension funds circle. 
Frenzy of mergers in energy: Reporting season roundup
10/09/2021  Hydrocarbons poised for a comeback.
TPG tipped to recover as mobile competition eases: Reporting season roundup
09/09/2021  Providers have lifted prices after years of a debilitating chase for subscribers at all costs , says Morningstar's Brian Han.
Short-sellers bet against ARK Innovation ETF
08/09/2021  What shorting ETFs means for long-term investors.
Surging lumber prices were no match for Brambles: Reporting season roundup
07/09/2021  Morningstar senior analyst Grant Slade says Brambles secular growth trend is intact despite nearterm headwinds. He discusses results from the building and construction materials sector.
Miners soar thanks to iron ore: Reporting season roundup
03/09/2021  Miners bask in the glow of iron ore prices while bargains remain in coal.
BHP-Woodside merger is mutually beneficial
23/08/2021  Post-merger Woodside would be well positioned to deliver on the value we've seen for a long time, say Morningstar analysts.
Investors are getting serious about sustainability
16/08/2021  But the sector lacks uniformity, says Morningstar's Christopher Franz. 
Long term outlook for AGL is positive
11/08/2021  Higher wholesale electricity prices bode well for AGL, according to Morningstar senior equities analyst Adrian Atkins.
How you can hedge your portfolio against inflation
11/08/2021  Morningstar FundInvestor editor Russ Kinnel describes some direct and indirect hedges for inflation protection.
The iron ore party can't last: Morningstar
10/08/2021  Copper and iron ore have benefited materially from China’s stimulus and the developed world recovery. But Morningstar analyst Mat Hodge see these benefit as transitory.
What the Afterpay acquisition means for investors: Morningstar Minute
05/08/2021  We believe the transaction has a high chance of succeeding.
Cannabis' federal legal status is not a total buzzkill
03/08/2021  The industry still has significant growth potential.
Stock of the week: Toyota
03/08/2021  Is one of the biggest sponsors of the Olympics positioned for an all-electric future?
2 listed microcap names to consider
23/07/2021  Morningstar's Lex Hall talks micro-cap stock picks with Carlos Gil, chief investment officer at Microequities Asset Management.
Big returns, big risks: Making money with microcaps
22/07/2021  Mornngstar's Lex Hall catches up with Carlos Gil, chief investment officer at Microequities Asset Management.
3 small-caps with Dawn Kanelleas
21/07/2021  The head of Australian small and mid-cap stocks at First Sentier Investors has her eye on ARB, Breville and IDP Education.
Forecast 2021–2022: A correction could be around the corner
20/07/2021  The strong performances of global stock markets in 2020–21 are unlikely to be repeated in the coming year says Morningstar's Peter Warnes.
'Overvalued' warnings grow as ASX 200 hits new high
12/07/2021  Morningstar equity analysts warn that equities remain overvalued despite Australia's strong economic recovery.
What to know about private equity
08/07/2021  Private equity is an exciting area for investors, with lots of hotly-tipped stocks. But there are risks to be aware of, says Pitchbook analyst Dylan Cox.
Lazard's 3 top picks for the global covid recovery
08/07/2021  Warryn Robertson is looking at French infrastructure, retail pharmacy and tax services.
Aussie banks $34bn surplus points to more shareholder dividends, buybacks
06/07/2021  Australia's largest banks have excess capital because they cut dividends, were more conservative on lending, divested assets and raised equity last year. Morningstar's Nathan Zaia thinks most of it should be returned to shareholders.
Weighing up the PEXA IPO
02/07/2021  PEXA burst onto the ASX this week in the biggest float since 2019. Morningstar's Gareth James gives his take on the company's future growth prospects.
Can the iron ore price keep rising?
30/06/2021  Iron ore prices have  been on a tear, boosting the profits of Australia's top miners.  How did we get here and is the only way up? Lex Hall sits down with Morningstar's Mat Hodge.
2 new stocks to watch
28/06/2021  Morningstar has recently initiated coverage of a food delivery app and a consumer finance product. 
'Strongest earnings season I've ever seen'
24/06/2021  Meeting the deluge of demand is the biggest task for US companies, says Bell Asset Management's Ned Bell.
Biotech beyond covid
22/06/2021  Are there still opportunities in the biotech sector now the covid-19 vaccine roll out is underway? We ask International Biotechnology Trust manager Ailsa Craig
Alibaba is still deeply undervalued
21/06/2021  Morningstar's director of Asia equity research is confident the e-commerce giant will bounce back.
Weighing up the Endeavour IPO
18/06/2021  A wide moat and attractive dividend potential are among the key takeaways of Woolworth's decision to demerge from the liquor and hospitality group.
'Then we got hit with the equivalent of a war'
15/06/2021  Lazard Asset Management's Warryn Robertson explains how companies in the Global Equity Franchise fund have adjusted to covid, and assesses the threat of rising inflation.
Understanding Magellan's active ETF strategy
11/06/2021  Magellan's Craig Wright tells Emma Rapaport why it is leading the charge in the active ETF arena and how its global equity product works.
3 off-the-radar small caps
10/06/2021  Callum Burns of ICE Investors explains his conviction in pharmaceutical distributor Ebos, PSC Insurance Group, and elite sports analytics provider Catapult.
Small cap gems and how to find them
09/06/2021  Callum Burns explains how ICE Investors identifies companies with original products and sticky customer bases.
Stock of the Week: Salesforce.com
08/06/2021  They’re building an empire.
3 oil stocks we still like
07/06/2021  A year ago the oil price went negative. How have oil giants handled the past 12 months and what's the outlook from here? Morningstar analyst Allen Good explains.