•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

Matthias Knab, Opalesque:

BlackRock writes on Harvest Exchange:

As investors continue to add factor-based strategies to their portfolios, industry watchers have wondered: are factor strategies getting too popular?

I hate waiting in traffic. I don't like the stops and starts, the feeling of crawling along, and just all that crowding. As any driver knows, it's not just the total number of cars that matter, but also the size of the road itself: the same amount of traffic on a freeway versus a winding single-lane road makes all the difference between a smooth journey and a traffic jam.

More than $18 billion flowed into U.S.-listed smart beta ETFs in the first half of 2017, following the $43 billion invested in 2016.1 These numbers sound impressive, so not surprisingly, some investors have wondered if factor strategies have become crowded, eroding their potential gains. But in the broader context: are factor strategies a highway or a backcountry road? Have factor strategies reached their capacity?

Let's start by citing some important facts and figures.

How much is invested in factor strategies today?

Currently, assets in factor strategies are simply dwarfed by the assets invested in traditional vehicles, such as passive and active funds.

[See impressive chart on Harvest]

As one example, consider......................

To view our full article Click here