Back to the issue of cost, and with commentators (though crucially not providers) talking up the prospect of zero-fee funds, there’s an argument to suggest that it is the world of passive funds where the next great invention can breed real success.
Interestingly, Morningstar data analysed by WisdomTree found ETFs suffered net outflows of $9.1bn in the first half of this year across Europe, while smart beta and alternatively weighted strategies achieved inflows of $5.7bn.
Still largely the domain of institutional investors, smart beta offers a different route to achieving diversification.
However, as we have seen with absolute return, only time will tell if these sometimes opaque strategies can deliver on their promises and capture the imagination of a largely sceptical UK retail investor market.
I’ll be taking a closer look at how the industry can innovate in the forthcoming September edition of Portfolio Adviser.
