Money managers are jumping on the smart-beta exchange traded fund bandwagon as more investors shift into alternative index-based strategies.

More are increasingly investing in smart-beta ETFs that try to boost returns or manage market risk as opposed to traditional market capitalization-weighted beta-index funds, writes Trevor Hunnicutt for InvestmentNews.

Smart-beta ETFs are based on indices that track specific rules or adhere to pre-described factors like low volatility, valuations and price momentum, among others, emulating actively managed styles in a passive ETF wrapper. In contrast, traditional market-cap weighted ETFs allocate a larger tilt toward bigger companies with a higher valuation.

Now, about $1 of every $5 is moving into smart- or strategic-beta ETFs, according to Morningstar data. There are 1,667 U.S.-listed ETFs on the market with $2.0 trillion in assets under management, and there are 430 enhanced ETF strategies that do not follow traditional beta-indexing styles with $212.3 billion in assets, according to XTF data. [Smart-Beta ETFs Are Attracting Heavy-Weight Investors]

Jumping on the quick expansion in the smart-beta ETF space, J.P. Morgan, PIMCO and even exchange operator Nasdaq OMX Group (NasdaqGS: NDAQ) have shown interest in alternative indexed-based ETFs.

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