Exchange traded funds are a relatively new innovation in the financial industry. As more people learn about the benefits of the ETF investment vehicle, ETF adoption has risen and assets have grown.

Now, financial advisors are showing greater interest for the new breed of smart-beta ETF options, potentially signalling a growth spurt for the alternative index-based ETF segment.

“We are hearing a number of sophisticated questions,” Theresa Brennan, Regional Vice President of ETPs for Deutsche Asset Management, told ETF Trends in a call.

Brennan pointed out that when ETFs first hit the scene, Deutsche Bank was fielding basic questions that introduced people to ETFs’ indexing methodology.

Now, advisors are asking more technical questions, which reflects a growing interest for the underlying smart-beta ETF strategies and how the funds may enhance an investment portfolio.

“Advisors are considering distinct differences between various strategies,” Brennan said.

Related: ETFs Gain Ground as Advisors Look to Passive Beta-Index Strategies

For instance, advisors are diving heavily into the various factor components of multi-factor, smart-beta strategies, according to Brennan.

“Advisors want to know how a factor has affected performance or enhanced returns,” Brennan added.

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