Why Are There So Few Bond Strategic Beta ETFs?

When it comes to strategic beta, equity is a much more straightforward proposition than fixed income. But ETF providers are developing smart beta fixed income products

Jose Garcia Zarate 27 October, 2015 | 10:30AM

The exchange-traded-fund (ETF) market is evolving fast. Investors now have access to a range of passively-managed products tracking indices which deliver active-like investment strategies. The market for “smart beta” ETFs, defined by Morningstar as “strategic beta”, is growing substantially.  

The two key factors driving bond performance are interest rate risk and credit risk

So far, the bulk of assets and product development have been concentrated in equity market exposures.  In fact, “strategic beta” and “equity factor investing” have become synonymous.

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About Author

Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe

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