Smart ETF Investing is More Than Factors

Factor-based investing has grown in popularity in the investment world, especially with the expansion of the smart beta ETF space.

On the upcoming webcast (available live and on demand for CE Credit), Smart Investing is More than Factors, Brandon Rakszawski, Product Manager for VanEck, and Dan Lefkovitz, Content Strategist, Indexes at Morningstar, will explore how we got here, where we may go, and dive into a smart investing approach that may stand out from factors and other smart beta approaches.

The so-called smart beta, enhanced, strategic beta, alternative or factor-based index ETFs all follow a similar theme where the underlying indices eschew conventional market capitalization-weighted methodologies for customized or rules-based allocations, tracking a range of strategies from equally weighting stocks to identifying momentum across different corners of the market, among many others. What ties the theme together is the ability to add exposure to specific factors found in traditionally active managed funds.

There are now hundreds of smart beta or factor-based strategies available, ranging from minor tweaks on existing broad-based indices to more customized options that capture returns from specific styles or asset categories.

Last year, single- and multi-factor ETFs saw over $8 billion in net inflows globally, according to Pensions & Investments. Total assets in these types of funds reached almost $560 billion globally by the end of February 2017, with $500 billion in the U.S. alone, according to ETFGI data.