"Smart Beta" Could Come Under Regulatory Scrutiny

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Mark Melin
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Stock Investment Lesson Pain

“Smart Beta” exchange traded funds, often attempting to mimic sophisticated hedge fund strategies in a typically “passive” investment product, is being given scrutiny from regulators. $1 Trillion “smart beta” category coming under regulatory pressure for risk Nishant Kumar and Simon Jessop  of Reuters are reporting  that the “strategic beta” fund category, which Lyxor Asset Management says is a $1 trillion category, is being critiqued by regulators regarding appropriate risk disclosure with a particular eye towards how the fund might perform during crisis. Regulators in the U.S. and Europe “have concerns around the level of transparency and risk disclosures,” Patrick Armstrong, senior…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.