As exchange traded funds (ETFs) become more commonplace around the world — the number available globally has surpassed 1,000 — they need to do more and more to distinguish themselves from the herd. PowerShares founder Bruce Bond thinks he has just the ticket with what he’s dubbed "intelligent ETFs," reports Sophia Grene with the Financial Times.
"Intelligent ETFs" aim to pair up the passive style of traditional ETFs with an actively managed concept. Bond has divvied them up into three categories: intelligent index, intelligent exposure and intelligent access ETFs.
Intelligent index ETFs are based on companies with the most convincing growth or value attributes, based on quantitative factors. Intelligent exposure ETFs track FTSE Rafi indexes, which track the market based strictly in economic terms. Intelligent access tracks indexes with a given theme, such as timber or water.
Bond feels the approach could give investors some comfort by combining "the best of both worlds. The efficiency of indexes, and valuation powers of active management."
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