FYI: Everyone’s got an opinion about smart beta.
For some, it’s the latest salvo in the passive revolution. For others, it’s a “marketing gimmick” that contradicts the basic premise of passive investing.
But for Jack Bogle, the founder of Vanguard, the problem with smart beta is more simple: they’re just “closet trackers”. Smart beta funds pretend to do something different and interesting – i.e., they pretend to be smart. But deep down inside, they’re hugging the index just like plain vanilla index funds.
“Given the remarkably high correlation of … smart beta ETFs with the return earned by the S&P 500, [they] could easily be classified as high-priced closet index funds,” Bogle wrote in his Little Book of Common Sense Investing.
Regards,
Ted
http://www.etfstream.com/news/5088_jack-bogle-was-right-smart-beta-etfs-are-closet-trackers-including-vanguards
