On Morningstar’s website, Ben Johnson, director of global ETF research, said, “Because the Analyst Rating we assign to ETFs follows the same five-pillar methodology as the Analyst Rating we assign to mutual funds, it not only helps investors evaluate ETFs, it also is easier to compare ETFs and mutual funds that offer similar exposure.”
The Analyst Rating for funds (including Medalist ratings) reflects a Morningstar analyst’s qualitative evaluation of a fund’s prospects.
These top-rated ETFs are among the lowest-cost active and index funds in their categories, according to Morningstar. And the company says that it reserves the Medalist ratings for those low-cost ETFs that they think will tightly track a sensibly constructed index. These attributes are likeliest to translate to better performance over the long run.
(Related: 18 Best ETFs in 6 Sectors: Morningstar)
Last year, ThinkAdvisor highlighted 18 ETFs that received Monringstar’s gold rating, which spread over six categories. This year, there were 20 with gold ratings, which were spread out over five categories: