Most Researched ETFs

Investment News published a list of the ten most researched ETFs, as compiled by Morningstar.  They were4 able to compile the list by tracking the number of times a fund's profile was accessed through Morningstar Advisor Workstation.  The top ten are:

1. iShares Barclays TIPS Bondsw (TIP)
2. iShares MSCI Emerging Markets (EEM)
3. SPDR Gold (GLD)
4. iShares MSCI EAFE (EFA)
5. Vanguard Emerging Market Stock (VWO)
6. iShares Barclays Aggregate Bond (AGG)
7. SPDR S&P 500 (SPX)
8. PowerShares DB Commodity Index Tracking (DBC)
9. iShares iBoxx $ Investment Grade Corp Bond (LQD)
10. iShares S&P U.S. Preferred Stock Index (PFF)

Only a couple of surprises here.   PFF is a pleasant surprise.  Preferred shares provide an attractive yield and are eligible for the 15% qualified dividend tax rate.  And its 7.40% yield dominates the 4.79% of LQD.  That there are three funds representing an inflation hedge theme (TIP, GLD, and DBC), with significantly different strategies and sponsored by three different management companies, is a testament to the sophistication of advisors today.

What this list indicates to me is that advisors are looking to ETFs to fulfill two roles in client portfolios:

1. Instant diversified exposure to a broad market or asst class; and
2. Easy liquid exposure to for highly specific portfolio enhancement (e.g. yield enhancement, inflation hedge).

These were the original objectives driving the development of ETFs at the turn of the century. As with open-end mutual funds, product extensions representing more narrow or arcane investment strategies are interesting, but will not be the main focus of the advisor community.