5:15 p.m. CDT, Oct. 4, Joyce Hanson here:
Live Blog Face-Off!
Morgan Stanley’s Paul Hatch faces off against iShares’ Mark Wiedman in a late Thursday afternoon panel at Morningstar ETF Invest 2012.
The topic: “The Changing Advisor Landscape”
Guess who favors wirehouse reps as portfolio managers? You got it: Hatch.
Guess who’s a big fan of a transparent future where fee-only planners build ETF portfolios? That’s right: Wiedman.
But when Morningstar analyst Scott Burns asked them about the future of fee-only planning, here’s the surprise – they both like it.
“If you want to know what happens to ETFs,” says Wiedman, “look to what happens in the fee-based world. Wherever fee-based arises, ETFs follow.”
“Transparency is good,” says Hatch. “It’s like competition. When it becomes a better value for clients, we’ll have more people coming to the business.”
As for the fiduciary standard, Hatch doesn’t pull any punches: “I think it’s a lot of hot air. All of the advisors in this room who don’t think they’re a fiduciary, raise your hand.”
Nobody in the room raises their hand.
3 p.m. CDT, Oct. 4, Joyce Hanson here:
Remember inflation? Whatever happened to it?
Break-out sessions are back in swing here at Morningstar ETF Invest, and I’m sitting in on an inflation session starring currency guru Axel Merk along with Chris Goolgasian of State Street Global Advisors and Mark Carlson of Northern Trust: “The Inflation Boogeyman—How Do I Protect My Portfolio?”
In answer, Goolgasian name checks Ernest Hemingway and quotes from one of Hemingway’s novels: “How did you go bankrupt?” a man asks his bankrupt friend. “Two ways,” the friend answers: “First gradually, and then suddenly.”
Keep that in mind when inflation seemingly strikes overnight and you’re paying $10 for a gallon of milk, Goolgasian says.
“The danger is in the future, and it’s important to manage portfolios for the future,” he notes. “Real assets can give you some assurance against that chance.”
Goolgasian likes inflation protected bonds, commodities and equities related to commodities, with a goal of beating CPI.
Axel Merk, meanwhile, likes gold as an inflation hedge—while acknowledging its volatility.
“It’s the purest indicator of the monetary madness that’s out there,” Merk says. “The rise of gold correlates perfectly with central bank easing around the globe. Gold by all means should do well, but we realize that it’s volatile.”
Read more from Axel Merk at Currency Manager Axel Merk Talks Money as Inflation Hedge at AdvisorOne.
2:30 p.m. CDT, Oct. 4, Joyce Hanson here:
Lunch just finished here at the Radisson Blu Aqua, and we’re all a bit stunned with the powerful, sad (but happy!) and inspiring story from keynote presenter Christopher Gardner, now CEO of his own firm but only after a year or two of homelessness while he scratched out a living cold-calling as a junior broker at Dean Witter.
Check out the movie starring Will Smith based on Gardner’s memoir “The Pursuit of Happyness.” And also listen to him talk if you ever get the chance – he’s a dynamite storyteller, with tales of being a single dad who had to change his baby’s diapers while sleeping in a San Francisco subway station. Some very successful business people here at Morningstar ETF Invest, and they gave Gardner a standing ovation.
Noon CDT, Oct. 4, Joyce Hanson here:
Sean Clark of Clark Capital Management Group is high on gold.
Speaking in an “Alternatives—Beyond Long/Short” breakout session here at Morningstar ETF Invest, Clark says gold is hitting new highs and sees it moving higher because governments are in a race to the bottom to see who can devalue the most.
“Gold is obviously a currency – it’s money,” Clark says.
11:35 AM, CDT, Oct. 4, Joyce Hanson here:
Just finished talking to Morningstar analyst Mike Rawson – a guy who clearly knows his way around an ETF. The big guns here in Chicago brought him into the Morningstar ETF Awards announcement to talk about the technical stuff: selection criteria, who’s up, who’s down, expense ratios, index data, etc.
Mike told me that when it comes to Morningstar’s Large Blend Category Award, he would tell his mother-in-law that if she were to have only one ETF in her portfolio, it would be Vanguard’s VTI and not SPDR’s SPY. SPY doesn’t hold small caps or most mid caps, while VTI does, and the SPY expense ratio is not the cheapest. SPY’s expense ratio is 9bp while VTI’s is 6bp.
P.S. For this third Morningstar ETF Invest conference, we’re in swank digs at the newly built Radisson Blu – just open about six months.
11:25 AM, CDT, Oct. 4, Joyce Hanson here:
The newly launched Morningstar ETF Awards have picked these best providers in five U.S. asset classes:
1) Commodities: iPath ETNs
2) International Stock: iShares