| Just when you thought you finally had “smart beta” exchange-traded funds figured out, along comes Smart Beta 2.0. The fund industry’s launch of these supposedly “smarter” ETFs may have come at a good time. That’s because a recent study of smart-beta funds—which generally weight their holdings by something other than market capitalization—raises questions about whether their past performance was due to “smarts” or mere coincidence.
In April, Denys Glushkov, a research director at the University of Pennsylvania’s Wharton Research Data Services, released the first draft of a paper titled “How Smart are ‘Smart Beta’ ETFs?” After evaluating 164 U.S.-stock ETFs over the 10 years ended in 2014, he concluded that these funds haven’t offered enough outperformance to justify their often-higher fees...............................................Full Article: Source
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