Smart beta funds are passively managed

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1. Smart beta' funds are passively managed, which means that consumers can easily understand their benefits in terms of low management fees; for this reason, asset managers can sell 'smart beta' funds directly to consumers.

2. Because financial decisions are "sticky" (i.e. consumers tend to stick with their service providers), financial institutions can devote more resources to acquisition marketing than non-financial companies

3. Passive investment management has become so successful that companies such as Vanguard can charge slightly higher management fees than many active managers

Reference no: EM131493463

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