What You Need to Know About 'Strategic Beta'
As these sometimes complex new funds continue to grow, investors need to be selective, writes Morningstar’s Ben Johnson.
Morningstar's global manager research team recently published "A Global Guide to Strategic-Beta Exchange-Traded Products," its second-annual landscape report about strategic-beta ETPs. The report examines trends in asset growth, asset flows, product development, and fees by region; assesses the origins of strategic beta and the various types of risk that these strategies look to control; and provides a practical guide to analyzing strategic-beta ETPs. Below is an excerpt from this report; investors can download the complete report here.
"Smart beta," "alternative beta," "enhanced indexes," "quantamental indexes"--at this point, the list of monikers describing the fast-growing middle of the active-to-passive spectrum extends long enough to put it just a few syllables shy of making a lunar landing. It's an arena that has further blurred the lines between active and passive management (see Exhibit 1), and one which is at the leading edge of the most recent wave of product proliferation within the global exchange-traded products landscape.
Ben Johnson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.