The rising group of smart-beta, enhanced, factor-based, intelligent or fundamental funds provides investors with a type of actively managed style in a passive index-based product. The ETFs track companies screened for factors like dividends or volatility to help provide a better risk-adjusted return.
The smart-beta ETFs also provide an alternative investment tool for investors in a market dominated by market capitalization-weighted funds, which provides increased exposure to larger company stocks. [Understand Smart-Beta ETFs Before Jumping In]
As more investors begin to understand the smart-beta strategies, adoption of these types of index products could pick up pace.
“I don’t think that a large group of people are skeptical about smart beta funds as a whole,” Agather said. “The important thing is to understand each individual strategy and whether it fits into your portfolio.”
For more information on the ETF industry, visit our current affairs category.
Max Chen contributed to this article.