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The Case Against Smart Beta

The backlash begins. | danielskorodyelov/iStock/Thinkstock

Smart beta has gone from contrarian to mainstream - just ask Research Affiliates' Rob Arnott, winner of the 2015 Wealth Management Madness bracket tournament - but how smart is it? Wesley R. Gray, team leader for Alpha Architect, argues on the firm's blog that smart beta ETFs might not be as successful as everyone perceives them to be. Based on research from Denys Glushkov of the University of Pennsylvania's Wharton Research Data Services, only 60 percent of smart beta ETF categories studied outperformed their raw benchmarks, and they also didn't display any marketably better performance during periods of negative benchmark returns. Gray also finds smart beta to be an expensive way to access active management.

Following the Money

Let's see how the dominoes fall. | vasabii/iStock/Thinkstock

Asset managers are facing increased scrutiny from international regulators after the banking system started moving large sums of money into capital markets. According to data from the City of London, the global fund management industry grew 13 percent in 2014 to $146 trillion, meaning about 80 percent of all assets outside of banks and insurance companies are in the hands of financial service companies. Regulators rank banks and insurance companies by their potential to cause a global financial crisis, and are looking to do the same with investment funds and asset managers. Though regulators said it’s too early to say what regulations funds or assets managers will face, firms like Pacific, Fidelity and BlackRock have already begun to push back.

Top Execs on Social 


Forbes recently evaluated social media usage of chief information officers at some of the largest global corporations, with three executives from financial services firms making the cut. Oliver Bussmann, UBS’ head of information technology for the Swiss-company’s Banking, Insurance & Asset Management, came in fourth with 12,100 followers on Twitter. Victor Fetter, LPL’s managing director and chief information officer, came in at No. 10 with over 5,700 Twitter followers and 500-plus LinkedIn connections. And John Shea of Eaton Vance came in at No. 15, with 4,115 Twitter followers. 

Old is the New Young

Experience matters. | Copyright Justin Sullivan, Getty Images

Should employers worry that nearly a third of workers in the U.S. are now over 50? According to a study by Aon Hewitt for AARP, there shouldn’t be any concern, as older workers bring key advantages to an employer, such as maturity, experience and loyalty. Compared to younger colleagues, the study notes that older workers have a slightly higher level of engagement. Cost differences between older and younger employees are also seeing a decrease because companies are increasing the use of auto-enrollment for 401(k) plans, which is boosting participation among younger workers.

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