Morningstar Advisor - December 2013/January 2014 - (Page 52)

Morningstar Conversation Exploring Indexing's Next Frontiers By Ben Johnson Two veterans and a relative newcomer discuss the methodologies and practices that have made their indexes successful. In October 2012, Vanguard fired the shot heard around the indexing world. The largest fund indexing firm on the planet announced that it was changing the benchmarks for a number of its funds from MSCI to a mixture of indexes provided by FTSE and CRSP, the University of Chicago's Center for Research in Security Prices. Vanguard's move illustrates how quickly the index industry is evolving. Index providers have moved from methodological convergence in the market-cap-weighted "bulk beta" corner 52 Morningstar Advisor December/January 2014 of Index Land to exploring the next great frontiers in areas such as "smart beta," as they attempt to isolate factors other than market beta in hopes of generating indexes that will beat their market-cap-weighted cousins over the long haul. Dow Jones Indices; and Raman Subramanian, executive director of index research at MSCI. To explore this new era of indexing, I hosted a panel discussion on Oct. 3 at the 2013 Morningstar ETF Invest Conference. Joining me were David Barclay, the chief operating officer of CRSP; Craig Lazzara, the senior director of index investment strategy for S&P we've seen a lot of convergence in the Our conversation has been edited for clarity and length. Ben Johnson: Over the past few decades, practices and methodologies used by index providers. Is there any room left for differentiation in the traditional cap-weighted benchmark space? How can you as index providers differentiate your core products?

Table of Contents for the Digital Edition of Morningstar Advisor - December 2013/January 2014

Morningstar Advisor - December 2013/January 2014
Letter From the Editor
What’s Your Purpose?
Working for Gen Y
How to Allocate College Savings
Mobius Looks to a New Frontier
Investments á la Carte
Investment Briefs
How to Manage Bonds for Today and Tomorrow
Cloud Is the New Engine of Growth
Knowing Where to Look
Economic Vulnerability Varies by Country
Factor Investing in Emerging Markets
Following the Rules
Exploring Indexing’s Next Frontiers
Frequent Fliers
Family Blind Spots
Optimal Portfolios for the Long Run
Finding Value in a Pricey Sector
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
The Emerging-Markets Roller Coaster

Morningstar Advisor - December 2013/January 2014