Russell has provided some of the most popular asset style indices that are arguably the prototypes to smart-beta indexing as we know it today. For instance, Russell Index ETFs include the $25.1 billion iShares Russell 2000 ETF (NYSEArca: IWM) and the $6 billion iShares Russell Midcap Value ETF (NYSEArca: IWS). [LSE May Only Want Russell’s Index Biz]

Moreover, the PowerShares Russell 1000 Equal Weight Portfolio (NYSEArca: EQAL), which equally weights  sectors and stocks taken from the Russell 1000 Index, has shown its advantages. [Equal-Weight Russell 1000 ETF Continues Shining]

Makepeace contends that since a lot of money is already being managed in a factor-based style among active managers who charge exorbitant fees, investors may, instead, turn to cheaper factor-based index ETFs.

“If [active managers]are being judged against a factor-based index, a pension fund can see what they are paying for,” Makepeace added. “The active managers will have to show that the returns they are generating are worth the fees.”

There are 350 U.S.-listed enhanced index-based ETFs with an average 0.56% expense ratio, according to XTF data. [Business is Booming for Smart Beta ETFs]

For more information on the enhanced index ETF space, visit our smart beta category.

Max Chen contributed to this article.