Further Education Will Go a Long Way for Smart Beta ETFs

Smart beta strategies have hit the exchange traded fund scene running, attracting hundreds of billions of dollars in assets. However, there is still a number of investors and financial advisors whom are unfamiliar with how smart beta works, reflecting the ongoing need for further education in the ETF space.

According to the latest 2018 FTSE Russell Advisor Smart Beta Survey, which covered 256 full-time, fee-based financial advisors and wealth managers divided almost equally between the U.S., U.K. and Canada, about 79% of U.S. financial advisors surveyed said they are “aware” of smart beta, but only 35% are “very familiar” with the smart beta approaches.

Additionally, 47% respondents revealed the only thing holding them back from utilizing smart beta strategies in their own portfolios is that they don’t know enough about how they work.

“Findings from our most recent survey show us that we have made strong progress as an industry in growing awareness around smart beta, but we clearly have further to go,” Tom Goodwin, senior research director, FTSE Russell, said in a note. “We continue to see a need among our clients for more education, information and insight around smart beta and how it can play a role in client portfolios.”

In the U.S. and Canada, more are looking for information about smart beta before raising their exposure to the investments. On the other hand, U.K. advisors expressed concern over the strategies’ performance and limited track records.