Listed below are a number of Frequently Asked Questions that we hope will help you navigate the ETF Analytics System, and make the best use of it. If you do not find an answer to your query below, please contact our Analytics Team using either the Online system to the right, or one of the alternative contacts provided.
Sales and Licensing Questions
How much does ETF Analytics Cost?
The cost for an annual subscription is $2,000 which covers 12 months of service.
How long does a subscription last?
Each subscription is one (1) year in length.
Does it cover all ETFs?
ETF Analytics currently covers Equity, Fixed Income, Commodities and Currency ETFs.
Will my subscription auto-renew?
Yes, subscriptions will auto-renew on the expiration date. An email will advise you of your renewal.
Can multiple people use the same license?
No, each license is dedicated to one (1) single user.
Are bulk license / enterprise deals available?
Yes, please contact email@example.com for further information (1.646.867.4481)
When will reports for other asset classes be available?
A phased rollout of additional asset classes will follow throughout 2013.
Can I show PDF reports to my clients?
Yes, you are able to print out reports for your clients. IndexUniverse does not claim responsibility, however, for any compliance/regulatory obligations you may have. Those are the responsibility of the subscriber.
Is there a limit to the number of times I can download PDFs?
No, currently we have not set a limit to the number of PDF reports you are able to download. However, we may be required to limit the number at a future date.
Can I download data? If so, are there limits to how much data I can download?
The data download functionality is currently under development. When it goes lives, clients will be able to download up to 50 data points for 50 ETFs up to 7 times per week.
Can I add my company name to a report and print that?
Yes, please contact IndexUniverse at firstname.lastname@example.org if you would like to add your firm name to the reports. Currently, this functionality is not offered directly through the online tool.
Can I use your ETF ratings to create model portfolios?
No. Please contact email@example.com for further information on model portfolios.
What is ETF Analytics? What does it try to do?
ETF analytics is a comprehensive, three-tiered system for rating ETFs. It is designed to help advisors and other professional investors choose the right ETF for their needs in every given area of the market. ETF Analytics uses quantitative and qualitative factors to analyze how well a fund accomplishes its goals, how well it trades and its relevance to its segment. ETF Analytics provides ratings on an aggregated basis and on the following three subcategory measures: Efficiency, which measures how well a fund delivers on its core promise to investors, including how well it tracks its underlying index, how transparent it is and whether it is taking on any hidden risks; Tradability, which measures both how liquid a fund is and how expensive it is to trade on both a primary and secondary level; and Fit, which measures how well a fund tracks a broad-based view of a given market sector, and details what twists and tilts it may take against that core market portfolio.
How do I tell which ETF is best for me?
We write our reports to help investors choose the fund that best meets their needs. Our users interpret the scores and information in the reports in light of their goals. IU’s Efficiency score probably matters most to longer-term investors. Small but persistent differences or costs (tracking, for example) can have a large impact on returns when compounded over time. Tradability matters to all, but is paramount for short-term investors. Transaction costs from trading – explicit and implicit – are a one-time charge, so they’re a proportionally larger part of total costs for short-term fund holders. Fit is our most flexible score. High Fit scores mean that the fund aligns with our chosen benchmark well. Investors wanting broad marketlike exposure to a given market should look for a high Fit score. Other investors may prefer funds that use fundamental selection or equal weighting, or take other factor-based tilts against the market. Such funds have lower Fit scores, but may suit that investor’s views perfectly. Fit does not represent our pick on fund outperformance.
Shouldn't I just pick the cheapest fund? They're all index funds, right?
The annual fee a fund charges is just one consideration when selecting an ETF. The difference in performance of two ETFs is often more attributable to the index the fund tracks than the expenses the fund charges.One of the goals of IndexUniverse's ETF Analytics product is to make clear the big distinctions that cause index funds to perform differently – factors such as geographical and sector tilts, weighted average market cap, holdings concentration, and many other metrics that determine the behavior of funds. All that data is presented in our reports, as well as incorporated into the ETF score, so that you can find the ETF that truly fits your investment perspective.
What do E, T and F mean?
E stands for Efficiency, which measures how well a fund delivers on its core promise, focusing on factors like tracking error, costs and systematic risk. T stands for Tradability, which measures the liquidity of the fund and the likelihood of getting a fair deal when trading an ETF. F stands for Fit, which measures how well the ETF captures the returns of the targeted market, compared against a neutral benchmark.
What does the letter and number grade mean?
The letter and number grades evaluate two different areas of an ETF: the areas in which there is a definite right answer, and the areas in which it is up to the investor to make a value judgment. Efficiency and Tradability measure areas of fund performance that everyone agrees on – essentially the factors that contribute to the costs of buying and owning a fund. Everyone agrees that lower expenses are better than higher expenses, smaller spreads are better than larger spreads, and so on. These sections' scores are combined to create a letter grade for the fund, giving us an objective measure of how well the fund is run and how easily it can be bought and sold. Our Fit metric looks at how an ETF performs compared with our chosen benchmark for the segment. We've done extensive research to select the benchmarks that accurately represent the mark, but we realize that investors often have their own strategies that differ from a broad market investment. Because of this room for interpretation, we give the Fit score a stand-alone numerical score. The Fit score essentially measures how well an ETF captures the broader market: Investors may either want to follow the broad market, in which case, they want a high Fit score; or bet against the market, in which case, they want a low Fit score.
Will the highest rated funds always have the best performance?
The scores IndexUniverse assigns to ETFs do not indicate future performance, nor do they rely heavily on past outperformance. The job of the Fit score is to explain how well a fund matches the broad market within its segment. The Fit score allow informed users to make market calls, or to specifically choose a broad exposure.
Does Index Universe consider the letter grade or Fit score more important?
The letter grade gives an objective measure of the quality of an ETF. If you are trying to access the index a particular ETF is tracking, the letter grade will be the key metric for you. It will suggest whether a given fund does a good job providing low-cost, reliable access to that index. If, however, you are not sure what particular index in a market segment you want to buy, the Fit score may be the best place to start. The Fit score will tell you whether a fund provides traditional, market-cap-weighted exposure to a given segment … or if it takes significant bets away from the index that deserves to be investigated.
Are different asset classes scored differently?
Yes, the scoring methodology is completely tailored to address the character and risks of each unique asset class.
Who writes the reports?
The reports are written by a dedicated, full-time team of ETF-focused analysts. Bios of the ETF Analytics team are available here
How often are the reports updated? How do I know when a new report will be written?
We update all reports on a rolling quarterly basis. Reports may be updated between quarters as warranted by major news.
What is the source of the data?
Our data is supplied by various data partners (such as Markit and FactSet), index providers (such as Thomson Reuters and MSCI) and culled from public documents, including source documentation from Securities and Exchange Commission filings and other sources. All index data is licensed directly from index providers. Historical fund data has been cross-checked against data provided by ETF issuers.
Your charts look different than everybody else's. Why do you use total return data for calculations and charting?
Total return gives investors the clearest indication of the return they would have realized had they owned the fund. Dividends can play a large or small role in a fund's return; neglecting them, as more charting software does, provides an innaccurate depiction of historical performance.
Is IndexUniverse a subsidiary of or controlled by any issuers or service providers in the ETF/Index industry? Does it license indexes to the ETF industry or other fund providers? Does it receive any income or fees tied to assets under management for ETF products or related indexes?
No, IndexUniverse prides itself on being an independent, investor-focused authority on ETFs and indexes. It does not license any indexes to ETF providers or earn any asset-linked basis points, fees or income from ETF providers of any kind.
ETF Classification System / Segment Questions
What is the ETF Classification System?
ECS stands for ETF Classification System. Developed by IndexUniverse, it's a hierarchical, rules-based, nonoverlapping system for classifying ETFs.
What factors are used to determine which segment a fund falls into?
Our ETF Classification System (ECS) looks at the asset class, economic development level, region and specific geography as described in the fund’s prospectus and marketing materials. Exposure on successively granular levels called category, focus and niche are also considered. Exposure headings vary by asset class. Each factor has its own parameters. Please see the ECS Overview and Description document on our site for more detail.
What is a segment benchmark and how is it selected?
The segment benchmark is an index that best represents the segment in question. All ETFs in a segment are judged on how closely their returns have hewed to the segment benchmark. The segment benchmarks are selected by the IndexUniverse Analytics team according to a series of guidelines to ensure they accurately capture the market using a rules-based approach. White papers detailing the index selection choices are available on our website.
How do you select the top 5 competing ETFs for each fund?
Competing ETFs are selected from within the fund’s segment based on similarity in objectives, methods and exposures.
What is a "Related" ETF?
Related ETFs include other competing funds in the same segment, including those with similar or opposing themes. A good example is a "gold miner's" ETF serving as a Related ETF for a gold bullion product like GLD. Related ETFs can include leveraged and inverse funds.
What is Efficiency and why does it matter?
Efficiency measures how well a fund delivers on its promises. It answers questions like: How expensive is the fund? How closely does the fund track its underlying index? How likely is the fund to exist for the foreseeable future? How healthy is the issuer of the fund? How much of the required legal documentation does the fund home page provide? How easy is it to determine the underlying index's selection and weighting and methodologies? Does the fund have a sound policy on securities lending? Does the fund have any hidden risks you should be aware of?
What is tradability and why does it matter?
Tradability measures the likelihood of getting a fair deal when buying or selling an ETF.
What is Fit and why does it matter?
Fit is a measure of how well a fund conforms to the index that IndexUniverse chose as the segment benchmark. It's important because it gives you an idea of how well your ETF covers the stocks in its segment, and whether a fund tilts and twists against a core market portfolio.
What are you using to compare each fund to in Fit? Is it its own index?
In the Fit section of our methodology, we compare each fund to a benchmark that we’ve selected for the fund’s segment. It’s possible that this IU segment benchmark may happen to be the same index that the ETF tracks. But in most cases, the fund’s index and the IndexUniverse segment benchmark will differ.
What browser do I need to have?
ETF Analytics has been tested and verified on all major Internet browsers. Support is not provided for Microsoft Internet Explorer Version 6.