Despite all the consternation and controversy over the terminology, smart or strategic-beta exchange traded funds are one of the fastest-growing segments of the ETF industry.
Strategic-beta ETFs, which funds employing various weighting methodologies from dividends to equal-weighting to factor-based funds, continue outpacing the ETF industry's already impressive growth. At the end of the second quarter, there were 844 strategic-beta ETFs, with collective assets under management of approximately $497 billion worldwide, according to Morningstar.
There is reason to believe the growth of strategic beta ETFs is still in the early innings because advisors and institutional are continuing to boost usage of such funds. According to FTSE Russell’s first U.S. retail financial advisor market survey (Smart Beta: 2015 survey findings from U.S. financial advisors), 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using multiple strategic-beta approaches.
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Year-to-date, three of the top 10 asset-gathering ETFs are currency-hedged funds, a group that can be classified in the strategic-beta realm. Those ETFs are the WisdomTree Europe Hedged Equity Fund (NYSE: HEDJ), Deutsche X-trackers MSCI ...
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