A majority of financial professionals are using smart beta products in place of actively managed funds, according a new survey conducted by VanEck.
ETF provider VanEck has released the results of its third annual smart beta survey, which was conducted in July 2018 among 153 financial planning professionals working in an advisory capacity (65 per cent of whom work for non-bank-aligned firms).
The survey found that 68 per cent of respondents are using smart beta strategies to replace actively managed funds, with their performance, superior risk-adjusted returns, lower volatility and reduced cost all cited as reasons.
Commenting on the results, VanEck managing director Arian Neiron said smart beta is giving active management “a run for its money”.
“For the first time since the survey launched in 2016, the majority of respondents are using smart beta strategies in their portfolios and they are using them as a replacement for active management strategies,” Mr Neiron said.
“Investors are now realising that active funds often lag their benchmark so they are shifting to smart beta strategies as more cost effective, transparent and effective ways to achieve their investment and performance objectives,” he said.
Almost two-thirds of respondents (64 per cent) said smart beta represents “good value for money”, up from 54 per cent in 2016.
“It’s not surprising that awareness of smart beta investing has increased, particularly as the number of smart beta ETFs on ASX has increased over the past two years,” Mr Neiron said.
“Now, one in three ETFs listed on ASX are smart beta strategies. ETFs are really at the forefront of smart beta investing,” he said.