Smart Beta Bond ETFs Could Be the Next Frontier

Smart beta equity exchange traded funds have been well received among investors, and in the wake of the success, asset managers are now looking to craft smart beta fixed-income ETF options.

After a three-decade long bull run in the fixed-income space, investors may have a harder time generating attractive returns with their bond investments. To meet this growing demand for alternative investment strategies, financial engineers at big asset managers are creating more next-generation fixed income ETFs that go beyond mimicking traditional beta indices.

“This is the next frontier of factor investing, and will become the next battleground as money begins to pour in,” Rob Nestor, head of BlackRock’s US iShares smart beta team, told the Financial Times.