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How to Select Strategic-Beta Exchange-Traded Products (Part 1)

How we separate the wheat from the chaff in this field.

Ben Johnson 12.12.2019

Strategic-beta exchange-traded products, or ETPs, continue to proliferate. As of the end of October, there were 704 such ETPs, by our count; 194 of them (27%) were launched over the past three years. Strategic-beta ETPs collectively held $892 billion, representing 21% of all ETP assets. These hybrid active/passive varietals present a new learning curve and a distinct due-diligence challenge to investors. Here, I provide a brief guide outlining how we set out to separate the wheat from the chaff in this field.

Low Cost, Low Cost, Low Cost

Did I mention low cost? If there is one thing investors can control, it is cost. As Jack Bogle reminded us time and again, in investing, you get what you don't pay for.

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About Author

Ben Johnson  Ben Johnson, CFA is the Director of Passive Fund Research with Morningstar.

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