How Smart-Beta ETFs Are Upending Active Management

Investors that are newer to the ETF space or have only kept a passing eye on it may think that smart-beta ETFs are a new phenomenon. However, firms like Powershares, FTSE Russel, and more have been offering products and indexes that fit that classification for as far back as 10 years. So why all the new interest, coverage, and products in 2015?

The answer isn’t exactly one thing but the main driver of demand for smart-beta ETFs is the desire for a more rules-based approach to active management that doesn’t subject capital to the whimsy of human managers while also offering a lower expense ratio.

The return of volatility this summer only heightened demand. Ability to better control volatility and increase alpha when the broader markets dip have providers of both ETFs and indexes innovating new ways to use multiple factors to generate better returns.

Tom recently spoke to Ken O’Keeffe, Managing Director, Global Head of ETFs at FTSE Russell, about the ways his firm is partnering with issuers to generate innovative products that satisfy the burgeoning investor demand.

FTSE Russell recently released a compelling research study that suggests some major trends are developing in the ETF space that everyone should be paying attention to0. Check out the details in their talk below!