Billions Flow Into Quant ETFs Behaving Just Like the S&P 500
- Purest smart-beta funds see outflows as watered-down peers win
- Investors paying for diversification might not be getting it
This article is for subscribers only.
The near $1 trillion chunk of exchange-traded funds known as smart beta has got a problem: Some of the most popular don’t seem that smart.
More than $14 billion this year has flooded into five of these quant strategies, which are wrapped up in an ETF in a bid to blend active and passive investing. Yet about $5 billion of this went to funds that barely deviate from the stock market, according to Bloomberg Intelligence. The smart-beta products with the purest exposures to systematic factors actually recorded outflows.