The ETF Screener is an online program or software that helps users find exchange-traded funds (ETFs). The results are returned after the user specifies certain criteria to filter the search from all exchange-traded funds available in the market.
Definition and Example of an ETF Screener
Exchange-traded funds (ETFs) are funds that contain a collection of securities or stocks that track the performance of a specific underlying index, sector, or asset group. ETFs can track a range of bonds or commodities, or an index such as the S&P 500.
Shareholders who buy ETFs do not own the underlying assets but have an indirect ownership through the funds. Although they are similar to mutual funds, ETFs trade more like stocks but with lower fees and higher liquidity than mutual fund shares. In other words, ETF shares can be bought and sold easily without delays in execution.
The ETF screener selects a few funds for more detailed analysis after the investor inputs the criteria they are looking for.
How an ETF Screener Works
Most ETFs track a benchmark index or assets, similar to index mutual funds. The first step in the process is to find ETFs that invest in the desired index or asset class. It is crucial to check the tracking record of the ETF, which measures how closely the fund follows its benchmark index. The closer the alignment, the better.
Next, you can narrow down your options that match the required criteria, which may include the following:
- Asset class, such as bonds, securities, or commodities
- High assets under management
- High trading volume
- Length of time the fund has existed – known as “time since inception”
- Low expense ratios
- Sectors, such as financial services or technology stocks
- Large-cap or small and mid-cap companies
- Market returns
It is wise to purchase ETFs with a relatively large amount of assets under management, high trading volume, and a long performance history. High assets and trading volume are important, as you will be able to buy and sell your shares without delays in execution compared to ETFs with low trading activity.
Some screeners may allow you to search for the overall returns of a group of ETFs and filter those that may be best for your personal tax situation. You can also factor in the management style of the ETF – whether you prefer an actively managed or passively managed fund.
Although ETF screeners can remove some of the guesswork in selecting ETFs based on specified criteria, you still need to research which ETFs fit your investment goals, financial objectives, and risk tolerance.
Types of ETF Screeners
There are many types of ETF screeners. Below is a list of some without a specific order. Learn more about the features of each screener and ease of use:
- Vanguard ETF Screener: Vanguard has been a pioneer in indexing and has expanded this expertise into the world of ETFs. The Vanguard ETF screener allows investors to screen ETFs by themselves, and they can also include mutual funds in the search. Investors can choose to screen Vanguard funds or include all other funds in the ETF or mutual fund universe. They can also select a specific fund family. Other filtering options include fund type, fund class, expense ratio, and historical returns.
- ETF Screener
- Morningstar ETF Screener: Morningstar is also a leader in mutual funds. It has expanded its knowledge and resources into the world of exchange-traded funds. The Morningstar ETF Screener allows you to set up a free account by entering your name and email address. This initial registration also includes an option to receive free email newsletters about mutual funds and ETFs. Morningstar’s premium services offer more for investors, although they require fees.
- ETF.com: ETF.com is dedicated entirely to exchange-traded funds. It helps investors track the best ETFs according to their investment goals. This online ETF screener features an intuitive search function. Investors can choose from the top three ETFs based on specified criteria, including geographic region, asset class, style (like concentration, specialization, and sector), and analyst picks.
- Seeking Alpha ETF Screener: This ETF screener is among the easiest to use. However, some filters are geared toward experienced investors. For example, the Seeking Alpha ETF Screener includes fundamental research criteria, such as asset class, expense ratio, and trading volume. It also has other filters, such as leveraged and inverse ETFs, which may not appeal to the average investor. To make this screener useful for non-professionals and experienced ETF investors, you should select to exclude leveraged, inverse, and exchange-traded securities options. Then complete your search.
- ETFdb.com ETF Screener: This screener is targeted toward experienced ETF investors. It provides a relatively easy-to-use filtering tool. After selecting an asset class, such as alternatives, bonds, stocks, and commodities, the screener opens subcategories like market cap and various regions, as well as sectors and investment styles.
Key Takeaways
ETF screeners are tools that allow investors to filter all ETFs in the market to find those that meet specific criteria. Filterable criteria using an ETF screener can include expense ratios, market returns, company sizes, and sectors. It’s important to identify the criteria that align with your investment goals, financial objectives, and risk tolerance. ETF screeners can be geared towards beginner or professional investors.
Source: https://www.thebalancemoney.com/picking-the-best-etf-screener-4141065
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