An Exciting Time for Smart Beta ETFs

The exchange traded fund industry just wrapped up another great year, and smart beta or factor-based index ETFs have quickly taken a center stage.

Smart beta or factor-based ETFs have allowed various investors to take targeted market exposures on specific styles that have traditionally been associated with actively managed investments.

The year 2016 “was probably more of a value factor environment. People looking for bargains as markets continued to go up, but [2017] there’s actually been a more story about quality, so you know even though markets are going up, there’s still some concerns, some defensiveness about the markets and how long they can keep going,” Rolf Agather, FTSE Russell’s managing director of research for North America, said at the Charles Schwab Impact Conference.

Consequently, investors may be looking into the quality factor or companies with healthy balance sheets or just higher-tiered companies that can withstand potential shocks in an extended bull market environment.