Exchange-traded fund launches have continued to accelerate, but not every shiny new strategy is worth owning. Good investment strategies can compensate investors with an appropriate return for the risks they take on. What kinds of ETFs are able to deliver over the long term, and which ones fall short? Dan Sotiroff is joining me today to explain the hidden risks in stock ETFs and what investors should look out for. Dan is a senior manager research analyst for Morningstar Research Services and the editor of Morningstar’s ETFInvestor newsletter. Can you talk about the idea that ETFs should be able to compensate investors for the risk they take on? What is an “appropriate level of return”?When looking at the risk and return profiles of ETFs, the term “active risk” often comes up. Can you give us a definition?What kinds of funds have the lowest active risk?Can you give an example of two ETFs that appear similar but take on different levels of risk?You’ve written that “any stock ETF with fewer than 100 holdings is a red flag.” Why is that?Does the management style of the fund make a difference for concentrated funds? Would a passive, index-tracking ETF run into the same issues as an actively managed ETF?Thematic ETFs are a popular example of concentrated portfolios with high active risk. How have they performed?Do investors tend to miss the timing on thematic funds? It seems like strong returns tend to be short-lived.At Morningstar, we often talk about fees as a predictor of performance. Do you see the same thing here?Should investors always choose a fund that takes on predictable risk? Or are there cases where higher active risk is worth it?What is one takeaway you have for investors that are trying to choose an ETF? Read about topics from this episode. Subscribe to Morningstar’s ETFInvestor newsletter. The Hidden Risks in New ETFsThe Best ETFs and How They Fit in Your PortfolioMorningstar′s Guide to ETF InvestingPassive Funds Beat Active Amid This Year’s Market Volatility What to watch from Morningstar. Investing in AI? Here Are 6 Undervalued Stocks for Buy-and-Hold InvestorsDo Dividend Stocks Benefit From Non-US Revenue?This Classic Investment Strategy Is Still Alive in 2025These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio? Read what our team is writing.Daniel SotiroffMargaret Giles Follow us on social media.Facebook: https://www.facebook.com/MorningstarInc/X: https://x.com/MorningstarIncInstagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/
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Investing in AI? Here Are 6 Undervalued Stocks for Buy-and-Hold Investors
Nvidia counts several of its Magnificent Seven pals as customers buying its sophisticated AI chips. And the world’s most valuable company says it could earn even more if geopolitical tensions between the US and China eased. But investors are debating whether the market is experiencing an AI boom or AI bubble. How should buy-and-hold investors think about investing in AI—are there any undervalued stocks left today? Dave Sekera is chief US market strategist at Morningstar Research Services and co-host of The Morning Filter podcast.Learn about the new Morningstar Medalist Ratings for semiliquid funds during a live webinar on Morningstar’s YouTube channel on Wednesday, Sept. 10. CEO Kunal Kapoor and ETF and Passive Strategies Research Director Bryan Armour will discuss what investors should know about private assets and the first funds to earn the new rating on the Investors First series.On this episode: Welcome back to Investing Insights, Dave. Nvidia recently wrapped up the Magnificent Seven’s earnings season showing AI spending is still strong. What does this mean for the tech-driven stock market rally? Do you think investors’ expectations for these mega-cap names are unreasonably high? Why or why not? Nvidia is sitting at the center of a geopolitical rivalry between US and China. The company says they didn’t sell its sophisticated AI chips to China in the previous quarter, and that a $50 billion opportunity exists. What do you make of this bottleneck and its impact? Many market watchers are divided over whether the current environment is an AI boom or AI bubble. Can you talk about Morningstar’s outlook? How should buy-and-hold investors think about investing in artificial intelligence? What are the most undervalued AI stocks right now? What do you think about the big bets Wall Street and Main Street are making on AI? What do you think individual investors should keep in mind? How is AI transforming Morningstar? Read about topics from this episode. Subscribe to The Morning Filter on Apple Podcasts, or wherever you get your podcasts.5 Stocks to Buy Before Their Big Discounts DisappearMarvell Earnings: Buy the Dip and Focus on the FundamentalsNvidia Earnings: No Signs of a Slowdown in Demand for AI ChipsThese Are the Best Mag Seven Stocks to Consider for AI InvestingThe Best AI Stocks to Buy NowInvestors First: Evolving Expectations and Expanding Access What to watch from Morningstar. Do Dividend Stocks Benefit From Non-US Revenue?This Classic Investment Strategy Is Still Alive in 2025These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio?Market Volatility: Investors Are Seeking Safety in Gold ETFs. Is It Working? Read what our team is writing.David SekeraKunal KapoorIvanna Hampton Follow us on social media.Facebook: https://www.facebook.com/MorningstarInc/X: https://x.com/MorningstarIncInstagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/
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Do Dividend Stocks Benefit From Non-US Revenue?
The revenue of US dividend stocks isn’t necessarily made in America. A portfolio of popular dividend-paying stocks is likely exposed to currency or geopolitical risks. That’s due to international revenue exposure: Some US-based companies earn 50% or more of their money outside of the country. A recent analysis of 35 dividend-paying stocks in Morningstar’s DividendInvestor newsletter found several well-known names generate sizable revenue overseas. So, how should investors balance US vs. non-US equity exposure? Morningstar’s DividendInvestor newsletter editor David Harrell explains what investors should know. Learn about Morningstar’s new Medalist Ratings for semiliquid funds during a live webinar on Morningstar’s YouTube channel on Wednesday, September 10th. CEO Kunal Kapoor and Global Head of Manager Research Laura Lutton will discuss what investors should know about private assets and the first funds to earn the new rating on the Investors First series. On this episode:You recently analyzed the international revenue exposure of dozens of dividend-paying stocks. But this wasn’t the first time. Why did you decide to revisit this?Let’s dissect the investigation. How did you choose which stocks to focus on, and what was the criteria? How did the recent results compare to the findings in 2021? Were there any surprises?Let’s zoom in on the revenue. Which dividend stocks increased or decreased their US revenue exposure?Morningstar analysts consider some of these dividend payers undervalued. Let’s first focus on names with more US revenue exposure. Who are they?Which companies with more international revenue exposure are undervalued?International stocks are having a long-awaited banner year versus US stocks. Are investors whose only international revenue exposure is these US-based stocks benefiting from this international rally?How should investors balance US vs. non-US equity exposure in their portfolios? That is, what if investors looking at their portfolio see that they have home-country bias? What should they consider from a diversification standpoint?Welcome to Investing Insights, Kunal. Let’s get started with you telling the audience a bit about your career here at Morningstar. It started back in the late 90s, right?Your series, Investors First, is airing live on YouTube for the first time on September 10th. Can you tell us about the mission behind it? What are you hoping to achieve with the series?It’s important to have these conversations with investors. What can Morningstar do to further empower them?Investors have experienced a lot of short-term volatility this year. How do folks stay focused on their long-term goals? Read about topics from this episode. Subscribe to Morningstar’s DividendInvestor newsletter. Why 2025 Is the Year to Invest in International Stocks Why It’s Not Too Late to Add International Exposure What Investors Can Learn from Dow’s 50% Dividend Cut Where to Find Bargain Stocks in an Expensive Market Watch more from the Investors First series:Investors First: Evolving Expectations and Expanding Access Where Should Investors Look Next Among Economic Mixed Messages? Investors First: Navigating the Rise of Active ETFs in a Competitive Market Investors First: The Convergence of Public and Private Markets What to watch from Morningstar. This Classic Investment Strategy Is Still Alive in 2025 These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio?Market Volatility: Investors Are Seeking Safety in Gold ETFs. Is It Working?Why Bonds Belong in Your Diversified Portfolio (Even Now) Read what our team is writing.David Harrell Kunal KapoorIvanna Hampton Follow us on social media.Facebook: https://www.facebook.com/MorningstarInc/X: https://x.com/MorningstarIncInstagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/
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21:44
This Classic Investment Strategy Is Still Alive in 2025
Is the 60/40 portfolio living up to its reputation of resilience this year? The merit of a classic portfolio of 60% stocks and 40% bonds has been a matter of debate in recent years. A diversified 60/40 strategy failed to protect investors in 2022’s broad market crash—in fact, an all-stock portfolio would have held up better. However, a historical deep dive from Morningstar concluded that the tried-and-true approach lessened the pain in almost all of the worst market crashes in 150 years better than an all-stock portfolio. Morningstar Inc Portfolio Strategist Amy Arnott discusses the 60/40 portfolio’s ups and downs and its performance in 2025.On this episode:What is a 60/40 portfolio, and why is it popular? We often hear claims that the 60/40 portfolio is “dead” or obsolete. Why does it get criticized so much? Some of that criticism flared up in 2022. Why was the performance so bad for the 60/40 portfolio that year? Volatility has rocked the markets in 2025. How has the classic investment strategy done so far this year? Are there any asset classes that have performed better so far in 2025? Why? And which ones have struggled? Interest rates are sitting above 4%, but market watchers are anticipating the Federal Reserve will cut rates in September. What could that mean for the fixed-income part of the 60/40 portfolio? How do you think the 60/40 portfolio will perform over the next few years? Should people still rely on the 60/40 portfolio, or is another strategy better like the 70/30 or 50/30/20, which can be a mix of stocks, bonds, and alternatives? The tried-and-true strategy has proved its worth. So, what’s the final takeaway for current retirees, future retirees, or anyone seeking less risk?Read about topics from this episode. The 60/40 Portfolio: A 150-Year Markets Stress TestIs the 60/40 Portfolio Feeling ’22?What We’ve Learned From 150 Years of Stock Market CrashesHow Does Your 60/40 Portfolio Allocation Compare With the Pros?Why 2025 Is the Year to Invest in International StocksWhy It’s Not Too Late to Add International ExposureWhy Holding Assets Outside the US Dollar Has Paid Off in 2025How to Use Gold in Your PortfolioPortfolio Diversification Is Winning in 2025 What to watch from Morningstar. These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio?Market Volatility: Investors Are Seeking Safety in Gold ETFs. Is It Working?Why Bonds Belong in Your Diversified Portfolio (Even Now)Covered-Call ETFs Are Booming. But Not All Yield Is Good Read what our team is writing.Amy ArnottIvanna Hampton Follow us on social media.Facebook: https://www.facebook.com/MorningstarInc/X: https://x.com/MorningstarIncInstagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/
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14:48
These 16 Standout Funds Are Making Big Bets. Do They Fit in Your Investment Portfolio?
It can sometimes seem like there’s an endless number of mutual funds for you to invest in. But not all of them are a right fit for your portfolio—and some aren’t worthy investments at all. A popular feature from Morningstar’s FundInvestor newsletter greatly shrinks the list and can help you home in on the winners. Russ Kinnel is the newsletter editor and senior principal of ratings for Morningstar Research Services. And he’s here to brag about his thrilling funds list. On this episode:Let’s begin with the idea behind the thrilling funds list. How did this get started, and what’s the mission? You start with thousands of fund share classes. How do you narrow the list to a few dozen, and what are you looking for? Thirty-three funds met your high standards and made the cut, and they’re all repeats. Did that surprise you? What kept some funds off this year’s list?A select group of these standouts are making big bets. Let’s start with the only thrilling fund from the diversified emerging-markets category.A trio of foreign large growth funds from Fidelity are focusing heavily on financials and industrials. What’s their story, and what makes each of these unique? Can you describe the funds that are wagering big time on the tech sector? The healthcare sector has struggled this year. But some funds from Vanguard, Fidelity, and Dodge & Cox appear ready to benefit from a rebound, right? Talk about those funds. Where should fixed-income investors look if they’re tweaking that side of their portfolio? Which income and dividend-focused funds are outshining their category peers? And finally, how can the audience test the funds in their portfolio against your thrilling list? Read about topics from this episode. The Thrilling 33How Smart People Screen for FundsStop Screening Funds This WayWorried About a Market Selloff? These 10 Funds Reduce Portfolio RiskThe Big Secret to Long-Term Investment SuccessHoly Smokes! These Funds Could Get Barbecued4 New Funds on Our RadarMorningstar Medalist Rating for Funds What to watch from Morningstar. Market Volatility: Investors Are Seeking Safety in Gold ETFs. Is It Working?Why Bonds Belong in Your Diversified Portfolio (Even Now)Covered-Call ETFs Are Booming. But Not All Yield Is GoodThis Dividend Investing Strategy Deserves a Second Look Read what our team is writing.Russel KinnelIvanna Hampton Follow us on social media.Facebook: https://www.facebook.com/MorningstarInc/X: https://x.com/MorningstarIncInstagram: https://www.instagram.com/morningstar... LinkedIn: https://www.linkedin.com/company/5161/
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