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Morningstar Investment Conference ETF Investment Ideas and Strategies


I’m at the 25th annual Morningstar Investment Conference in windy Chicago where the best minds in the fund industry have swapped mutual fund and exchange traded fund strategies in the ever changing financial environment.

One of the big topics at the conference was saving toward retirement. Ronald O’Hanley, an executive at Fidelity Investments, sees an ongoing problem in America’s retirement outlook. Specifically, he points out that once the 72 million baby boomers generation hits retirement age, the 82 million millenials are next, reports Abram Brown for Forbes.

Consequently, O’Hanley is advising investors to look at low-cost passively managed stock index funds as a way to help optimize investment returns.

“In a macro, top-down environment, where what Ben Bernanke says is more important than what Peter Lynch thinks, you’ll see flows much more driven by passive,” O’Hanley said. “I think if you see the market you’ll see a bit of a return to active managers, but passive is here to stay and not just as way to get exposure, but as a way at to put together larger and better and more durable portfolios.”

Additionally, income-oriented investments will never go out of style. [Multi-Asset ETFs Yielding Over 5%]

“If you want to find opportunities look for a fund, stock or bond yielding a little lower than its peers,” Russ Kinnel, director of mutual fund research at Morningstar, said in an InvestmentNews reports. We’re so focused on higher yielding income we’re creating opportunities outside of them.”

John Bogle, founder of Vanguard, also addressed the reform talks over money market funds and how the SEC may break the buck, adding “I thought the $1 NAV was crazy from the day it began,” Ignites reports. [Short-Duration ETFs Can Substitute for Money Market Funds]

“The fact is that money market fund net asset values fluctuate,” he said. “[Mutual fund firms] don’t want to let the world know that money market funds’ net asset values fluctuate.”

Investment managers are also warning advisors about the dangers in emerging market equities.

“Over the last five or six years there’s been a wave of equity money moving into emerging markets indiscriminately,” David Hero, portfolio manager at Oakmark International Fund, said. “That’s made stocks frothy. I still stand by the notion that emerging markets will be the engine of global growth over the next 20 years, but that’s different than saying ‘Brazil has a lot of good companies trading at good prices. Emerging market equities are starting to get beat up. if this keeps up, maybe they’ll end up in our holdings in a year.”

Alternative investment strategies have also been gaining in popularity as advisors seek out ways to help diversify portfolios and limit risk. There are now over 400 alternative strategy mutual funds and ETFs, Nadia Papagiannis, Morningstar’s director of alternative fund research, said. Panelists explain that alternatives help clients to stay in the stock market during volatile conditions, writes Allan S. Roth for Financial Planning.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.