Daniel Greenhough, investment manager at St Albans-based Lumin Wealth, flagged cost as weighing on his view of smart beta ETFs.
“The ETF provider has to pay the provider of the underlying index. It’s not always clear what percentage of the ongoing fund charge on a smart beta ETF is paid to the index provider.
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“For example, the iShares MSCI USA Value ETF has a total expense ratio of 0.2 per cent whereas the standard market cap weighted iShares ETF has a TER of 0.07 per cent. It’s not made clear how the 0.13 per cent difference is split between index provider fees and trading costs.”
laura.miller@ft.com
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