An ETF screener typically consists of an internet-based or software program that helps users find exchange-traded funds (ETFs) after setting certain criteria to narrow down or filter the search from every ETF available on the market.
What Is an ETF Screener?
ETFs track the performance of an asset such as bonds, a commodity, a group of assets, or an index like the S&P 500. Shareholders who purchase ETF securities don't own the underlying assets, but do have indirect ownership through the ETF. While similar to mutual funds, ETFs trade more like stocks, with lower fees and higher liquidity than shares of a mutual fund.
The ETF screener selects a handful of funds to analyze more closely, once the investor has entered the criteria they seek.
When using an ETF screener, the investor usually searches for a particular type of ETF, such as a large-cap stock ETF. The investor can then use the ETF screener to display all of the publicly traded ETFs categorized as large-cap stock, or a sub-category like large-cap growth or large-cap value, and then have the screener sort the funds by a data subset, such as their expense ratio or historic annualized rate of return.
- Alternate name: ETF Filter
How ETF Screeners Work
The majority of ETFs track a benchmark index or asset, similar to how index mutual funds work, but the best ETFs generally have the lowest expense ratios.
For example, if you're looking for the best ETF that tracks the S&P 500 index, you would narrow the universe of ETFs down to the cheapest ones that hold large-cap stocks. Some screeners may require further classification, such as "large-blend" or "U.S. Equity."
Once you have three or four of the cheapest, such as S&P 500 index ETFs, you can analyze those three individually to see which fund best meets your needs.
Other data points to consider when screening and analyzing ETFs include:
- assets under management
- trading volume
- date of inception
It's wise to buy ETFs with relatively high assets, good trading volume, and long track records of performance. The high assets and trading volume matter because investors should avoid buying thinly traded ETFs.
Higher assets and greater trading volume generally indicate a better ETF choice than one with lower assets and thinly traded (lower) trading volume.
After finding ETFs that invest in your chosen benchmark or category and narrowing down the choices to ones with higher relative assets, volume, and time since inception, look at one more data point called the tracking record. This means to look at how closely the fund tracks its benchmark—the closer it is, the better.
Some screeners will let you search for total returns for a group of ETFs and filter out those which may be better for your personal tax situation. You can also add the ETF's management style into the equation—whether you want an ETF with an active or passive management team.
Keep in mind, screeners take some of the guesswork out of choosing ETFs based on what criteria you select. But you still need to do your research on which ETF is right for you based on your own personal financial situation and goals. In effect, you need to know exactly what you're looking for before you use a screener.
Types of ETF Screeners
To avoid any bias toward a particular ETF screener, the following list has no particular order. Each description summarizes the respective screener's functions and ease of use:
Vanguard Mutual Fund and ETF Screener
Vanguard was a pioneer of indexing and has extended this expertise into the realm of ETFs. Vanguard's ETF screener allows investors to screen for ETFs alone or they can also include mutual funds in the search. Investors can choose to screen Vanguard funds or they can include all other funds in the ETF and/or mutual fund universe. Investors may also choose one particular fund family. Other filter options include fund type, fund category, expense ratio, and historic returns.
Morningstar ETF Screener
Morningstar, another mutual fund pioneer, subsequently extended its knowledge and resources to the expanding world of ETFs. Morningstar lets you set up a free account by entering your name and email address. This initial registration also includes an option to receive free email newsletters on mutual funds and ETFs. Morningstar's Premium Services offer much more to investors, although these added services require fees.
ETF.com, which is completely devoted to ETFs, helps investors track down the best ETFs for their respective investment objectives. This online ETF screener has an intuitive search function. It lets investors choose up to three of the best ETFs based upon the selected search criteria, which include geographic region, investment category, style (i.e., focus, niche, and segment), analyst picks, as well as other selections. This particular ETF screener, although intuitive and relatively simple, may be best suited for investors with more experience.
Seeking Alpha ETF Screener
This ETF screener is among the easiest to use, although some of the filters are geared toward experienced investors. For example, the Seeking Alpha ETF Screener includes the primary search criteria, such as asset class, expense ratio, and trading volume, but it also has other filters such as leveraged ETFs and inverse ETFs. These won't appeal to the everyday investor. To make this screener most useful for nonprofessionals and more experienced ETF investors, simply select to exclude the options of Leveraged, Inverse, and ETNs (exchange-traded notes), then complete the search.
Another ETF screener geared toward more experienced ETF investors, ETFdb.com offers a relatively simple and easy-to-navigate filter tool. After selecting an asset class, such as alternatives, bonds, equity, and commodity, the screener opens sub-categories such as the various market caps and regions, as well as sectors and investment styles.
- ETF screeners are tools that let you filter through all the ETFs on the market to find the ones that meet specific criteria.
- You must know which criteria are important to you before using the screener.
- Some screeners are geared to professional investors.