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Smart Beta Debate Sparks Identity Crisis at Vanguard

  • Smart-beta ETF assets hit record with Vanguard on sidelines
  • Asset manager seeks regulatory approval for U.S. active ETFs

Are smart-beta funds active or passive? For Vanguard Group, the cost of debating that point has been nearly $800 billion.

At least, that’s how much the rest of the mutual fund industry has amassed in the investment strategies, money management’s hottest innovation since the ETF itself. Only the smallest sliver has gone to Vanguard, thanks to years of soul-searching over how to market the concept without alienating clients trained to resist Wall Street innovations.