6 Key Facts About Strategic Beta ETFs

LOW COST FUNDS: Confused about strategic beta ETFs? Also called smart beta ETFs, these active/passive hybrids are growing in popularity. We bring you the six need to know facts

Susan Dziubinski 24 April, 2015 | 2:31PM

Unless you've been actively trying to avoid them, you've probably heard about strategic – or ‘smart’ – beta funds more than once or twice. These index-linked investments focus on one or more "factors" or attributes in an effort to improve their returns or alter their risk profiles relative to traditional market benchmarks.

Strategic beta strategies are being executed via the ETF format and have exploded in popularity: By the end of 2014, more than $400 billion rested in strategic beta ETFs globally, representing a significant chunk of the $2 trillion ETF market.

Advocates say that strategic beta funds are low-cost entryways to specific investment tilts that were previously available only through higher-priced actively managed funds. Some financial heavyweights think these funds can be useful if understood and used correctly. Others view strategic beta funds with scepticism.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Susan Dziubinski

Susan Dziubinski  Susan Dziubinski is senior product manager with Morningstar.com.

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites