Lydon also highlighted the rise of smart beta or intelligent index ETFs. Last year, smart beta ETFs attracted $65.1 billion in new assets, nearly double the $34.2 billion hauled in by the group in 2012. There is mounting evidence to support the notion that the smart beta or intelligent indexing boom still has plenty of room to run. [Smart Beta ETF Boom Ongoing]
“Advanced beta strategies are playing a more influential role in some of the world’s largest portfolios. Forty-two percent of investors currently use advanced beta and another 24 percent plan to do so over the next three years,” according to a study by State Street Global Advisors, the second-largest U.S. ETF issuer.
“The next wave in the ETF space is moving away from the conventional indexes like the S&P 500,” added Lydon. “Many felt that active management in the ETF space was going to be the next huge evolution, but its actually smart beta that is picking up huge momentum. In an equal-weight or fundamental index, over time, these structures actually do well and, many times, better. It’s a consideration for investors, moving away from legacy indexes.”