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Are Strategic Beta ETFs a Threat to Active Fund Managers?

Active managers will now have to demonstrate that they can outperform after deducting the influence of easily measurable factor exposures.

Hortense Bioy, CFA 22.01.2015

This article was originally published in Investment Adviser magazine in the UK.

Strategic beta, more commonly known as “smart beta,” is all the rage at the moment. Everyone in the ETF world talks about it and new products carrying the label launch almost every week in Europe.

Investors are buying into the concept, too. Designed to either improve return or alter risk relative to traditional market-capitalization-weighted indexes by using factor tilts, strategic beta indexes are garnering assets. Global assets in strategic beta ETFs have increased by 87% in two years and now account for US$380 billion, according to Morningstar data.

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About Author

Hortense Bioy, CFA

Hortense Bioy, CFA  Hortense Bioy, CFA, is Director of passive fund research for Morningstar Europe.

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