About the Editor
Ben Johnson, CFA, is director of global ETF research for Morningstar. Before assuming his current role in 2012, he was director of ETF research for Europe and Asia. He also previously served as a senior equity analyst, covering the agriculture and chemicals industries. Before joining Morningstar in 2006, he worked as a financial advisor for Morgan Stanley.

Johnson holds a bachelor’s degree in economics from the University of Wisconsin. He also holds the Chartered Financial Analyst® designation. In 2015, Fund Directions and Fund Action named Johnson among the 2015 Rising Stars of Mutual Funds.


Investment Strategy
Morningstar ETFInvestor scans the globe for value and improving fundamentals across virtually all asset classes. Editor Ben Johnson draws upon academic and practitioner research — including Morningstar's sizeable bench of stock, bond and fund analysts — to find reliable drivers of outperformance.

Morningstar ETFInvestor features five model portfolios.

The Basic Portfolio harnesses the market's collective wisdom with ultra-low-cost funds and is the baseline portfolio against which the three other portfolios will be compared.

The Defensive Portfolio aims to provide lower volatility, better downside protection, and better risk-adjusted performance than the basic portfolio over the long-term.

The Factor Portfolio is designed to earn higher returns than the basic portfolio over the long-term.

The Income Portfolio attempts to earn a higher distribution yield than the basic portfolio, without taking a lot more risk.

The ESG Portfolio targets firms with strong corporate governance and sustainable environmental and social practices, while offering competitive returns and similar risk to the basic portfolio.

 
About Editor Editor's Photo
Bryan Armour, CFA
Director, Passive Strategies, North America and Editor
Bryan Armour is director of passive strategies research for North America at Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. Before joining Morningstar in 2021, Armour spent seven years working for the Financial Industry Regulatory Authority, conducting regulatory trade surveillance and investigations, specializing in exchange-traded funds.
Featured Posts
New Issue: People Pillar

The PDF version of the November issue of ETFInvestor is now available for download

If the link above doesn’t work, you can download this month’s issue by copying this address into your browser: http://etf.morningstar.com/Newsletter.aspx?download=currentIssue

Even the best-laid plans of mice and men often go awry. Poor implementation can ruin the best strategies, even for index funds. That’s why our due diligence of a fund’s portfolio management team – culminating in a rating of the fund’s People Pillar – is integral to our ratings process. Here, I’ll take a deep dive into how Morningstar Manager Research staff thinks about the strengths and weaknesses of investment teams.

Here's a rundown of what else you’ll find in this month’s issue:

  • Mo’ath Almahasneh replaces the stock sleeve of the ESG Portfolio with an actively managed fund from an ESG leader to examine the impact on ESG characteristics and performance.
  • We spotlight a pair of funds whose managers do a great job of applying discretion in smaller markets: iShares National Muni Bond ETF MUB and Dimensional US Small Cap Value ETF DFSV.
  • Lan Anh Tran dissects the active management of passive bond funds.
  • Daniel Sotiroff looks at the trading edge held by active managers and how passive funds are starting to codify those advantages in their indexes.

Bryan

MEI Performance Graph
Click here for important information about the Model Portfolios' hypothetical performance.


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Contact Your Editor
 
About the Editor


Bryan Armour is director of passive strategies research for North America at Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc.

Before joining Morningstar in 2021, Armour spent seven years working for the Financial Industry Regulatory Authority, conducting regulatory trade surveillance and investigations, specializing in exchange-traded funds. Prior to Finra, he worked for a proprietary trading firm as an options trader at the Chicago Mercantile Exchange.

Armour holds a bachelor's degree in economics from the University of Illinois at Urbana-Champaign. He also holds the Chartered Financial Analyst® designation.

Investment Strategy


Morningstar ETFInvestor scans the globe for value and improving fundamentals across virtually all asset classes. Editor Bryan Armour draws upon academic and practitioner research — including Morningstar's sizeable bench of stock, bond and fund analysts — to find reliable drivers of outperformance.

Morningstar ETFInvestor features five model portfolios.

The Basic Portfolio harnesses the market's collective wisdom with ultra-low-cost funds and is the baseline portfolio against which the three other portfolios will be compared.

The Defensive Portfolio aims to provide lower volatility, better downside protection, and better risk-adjusted performance than the basic portfolio over the long-term.

The Factor Portfolio is designed to earn higher returns than the basic portfolio over the long-term.

The Income Portfolio attempts to earn a higher distribution yield than the basic portfolio, without taking a lot more risk.

The ESG Portfolio targets firms with strong corporate governance and sustainable environmental and social practices, while offering competitive returns and similar risk to the basic portfolio.

Model Portfolios hypothetical performance


Hypothetical performance is investment performance returns not actually achieved by any portfolio of a financial institution or professional. Hypothetical performance may include, but is not limited to, model performance returns, backtested performance returns, targeted or projected performance returns, and/or pre-inception returns. Hypothetical performance returns are theoretical, for illustrative purposes only, and are not reflective of an investor’s actual experience. Hypothetical performance returns are based on historic economic and market assumptions. Actual performance returns will vary. Hypothetical performance returns do not reflect actual trading and may not reflect the impact that material economic and market factors had on the decision-making process for this portfolio.

Each of the model portfolios (each, a "Model Portfolio") is designed to showcase a different investment strategy and how using different types of fund vehicles (each, a “Fund Vehicle”) can affect the performance of that strategy. These Model Portfolios are not designed to provide individualized recommendations/advice but instead are meant solely to be used for general, educational purposes. The actual inception date for each Model Portfolio is November 1, 2018. However, for purposes of this modeling exercise, Morningstar has derived hypothetical performance numbers for each Model Portfolio using the percentage-weighted performance numbers (back through December 2007) for each of the Fund Vehicles comprising that Model Portfolio. If, in any particular instance, a Fund Vehicle has an inception date after December 2007, Morningstar uses a proxy performance number for any "gap period" (i.e., December 2007 to the Fund Vehicle’s actual inception date). This proxy performance number is calculated by taking the return performance numbers generated during the relevant gap period by the index that the Fund Vehicle initially used as its primary prospectus benchmark and reducing those numbers by the Fund Vehicle fees (measured in percentages) charged as of its inception date. Model Portfolios rebalance to their target weight for each Fund Vehicle at the end of each year, unless otherwise stated. Dividends are automatically reinvested in Fund Vehicles. Morningstar applies fund expense ratios. No additional management fees are included.