The biggest trend in indexing and exchange-traded funds (ETFs) could be the race to zero in terms of fees/expenses.
But a very close second would be the use of alternative indexing to craft portfolios. Dubbed smart beta, the number of funds using factor or alternative indexing has exploded in recent years as investors seek to outperform bread & butter benchmarks. We here at ETF Database tag over 500 different ETFs as having a smart beta tilt.
It’s easy to see why investors have flocked to smart beta ETFs. You basically get the best of both active and passive management in one fund.
The thing is, much of that explosion in interest has only been directed toward equities. Fixed income and bond investments haven’t received as much love from portfolios. But that’s a real shame. Fixed income and smart beta could be the smartest bet of all.
Interested in fixed income ETFs? Check out this article to learn more.