ETF Trends
ETF Trends

Most exchange traded fund funds passively reflect the performance of an underlying benchmark index, but as the industry grows, more sophisticated indexing methodologies are being implemented, providing investors with active management styles through a passive wrapper.

At the ETF Virtual Summit on January 15, the featured panel on “Indexing Innovation: Launching ETFs to the Next Level,” which includes speakers from Morningstar, Charles Schwab, Russell Indexes and NASDAQ OMX Global Indexes, will highlight the changing face of indexing.

Traditional indices are based off a market-capitalization scheme where the largest stocks have the largest position within the index.

However, more index providers are crafting alternative, rules-based, factor-based or so-called smart-beta indices to meet changing investor needs.

“There’s more and more tools that financial advisors can use to help better manage their client’s portfolios, but as that new tool comes out, well somebody’s got to tell you how it works,” Ken O’Keeffe, Managing Director of Investable Products at Russell Investments, said in a recent interview.

For instance, smart-beta, intelligent, factor-based indexing has become one of the next big things in the ETF industry. [Russell Investments Educates Investors on ‘Smart-Beta’ ETFs]

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