As smart beta strategies have increased, investors—and some advisors—have been left wondering: What the heck is it? Rob Arnott of Research Affiliates, the firm that is frequently credited with coining the term "smart beta" (mistakenly, he'd say), spoke with Investment Advisor about these strategies.
The April issue also features the third of four articles dissecting the results of the 2013 People and Pay study by FA Insight. With the increasing prevalence of lead advisors—and their impending retirement—many firms are struggling to fill what will be a very big hole. FA Insight's Eliza De Pardo and Sarah Pelonio explain what those firms can do.
And the amount of assets in MLPs has grown an explosive 900% since the end of 2009, according to Curt Pabst of Eagle Global Advisors. He goes over the costs and benefits of different MLP strategies to help determine which might be best for a portfolio.
Advisors are often skeptical of following massive flows of money, preferring to stick to a planned asset allocation and fund families with which they're comfortable. Think of all the money that flowed into bonds during 2012 as the equities' bull run gathered steam. Investors were climbing that wall of worry, but advisors' job is to manage emotions in investing.
So what to make of the massive flows of money that have been going into vehicles—mutual funds and especially ETFs—that pay homage to "smart beta"? Are those fund flows merely a response to smart marketing ploys? Does the entire notion of smart beta make any sense? Is it not just taking a tilt toward active investing nestled in an index wrapper?
Group Editor-in-Chief Jamie Green talks to Rob Arnott, chairman and CEO of Research Affiliates and the "grandfather of fundamental indexing," as well as executives at Charles Schwab, to learn more about the new class of strategies.
See Also: With increased attention comes increased criticism. Smart beta skeptics have their say too.
