Smart-Beta Price War Is Bad For All Managers

Smart-Beta ETFs are the fastest growing asset class in the market. Benefitting from both the demand for low-cost passive funds and investors' desire to have exposure to particular styles, on a global basis smart-beta funds assets under management at smart beta ETFs are up 18.3% this year to a record $630 billion as of the end of August, according to ETFGI, a London-based ETF research and data provider.

August was the 18th consecutive month of net inflows to smart-beta ETFs on a global basis. Year-to-date flows are $48.9 billion, greater than the $33.8 billion for the same period in 2016 for smart-beta ETFs and other exchange traded products. Over the past five years, assets under management have expanded at a compound...