Smart beta exchange traded funds have made a splash in the financial industry, but financial advisors and investors remain wary of the products, citing unfamiliarity with the strategies as their main cause of concern.
Consequently, companies like Hartford Funds are making greater strides in educating the investment community and the benefits of these alternative index-based products.
Hartford Funds recently announced that it is launching its “whiteboard video series” to educate investors and advisors about all things relating to strategic beta ETFs.
“As the strategic beta category continues to grow both at Hartford Funds and in the marketplace at large, it’s important for investors and advisors to understand the role these products can play in portfolios and how to effectively implement them,” Ted Lucas, head of Systematic Strategies and ETFs at Hartford Funds, said in a note. “We created the ‘Strategic Beta ETFs Explained’ video series to break these concepts down into a digestible and engaging format so advisors and their clients can make better informed decisions to help investors reach their long-term goals.”
The series will touch upon a number of relevant topics, such as high level strategic beta concepts and how the ETFs operate within a portfolio.
The series was given birth after Hartford Funds found in a recent survey that a lack of familiarity with these investment products prevented both advisors and investors from exploring strategic beta or smart beta ETFs.
In a survey of 800 investors and over 300 financial advisors on smart beta ETFs, Hartford Funds discovered that 62% of advisors were familiar with smart beta ETFs but 72% either don’t use them at all or only have a 0 to 10% of client portfolio assets invested in the solutions. Of the advisors who did not invest in smart beta ETFs, 41% say it was because they are unfamiliar with the strategy. The findings were similar down to investors, with only 14% claiming familiarity with smart beta.
“As strategic beta ETFs proliferate the marketplace, advisors have an enormous opportunity to educate themselves and their clients about their potential advantages,” Lucas said. “These investment products have the potential to help clients solve for specific objectives like growth, volatility and income – typically at a lower cost than traditional actively managed mutual funds.”
Consequently, Hartford Fund’s whiteboard video series may help both advisors and investors gain better insights into the various aspects of smart beta ETF investments. The initial episodes will cover topics like the “the space between” or bridging the gap between passive and active investing and defining smart beta ETFs, along with other broad ETF-related educational pieces that cover the underlying creation and redemption process and liquidity.
For more information on smart beta strategies, visit our smart beta category.