In 2013, two product trends in the ETF space dominated the press: smart beta and actively managed ETFs.

Both of these innovative approaches are designed to compete with index funds as well as actively managed mutual funds. These investment vehicles are meant to provide asset managers and their advisor clients with differentiated products and strategies with enhanced returns. While these products have proven successful in attracting assets and have performed well, they have shown some limitations - opening the door for the next wave of product innovation to meet asset managers' investment needs. Mutual fund and ETF providers require an investment vehicle that deploys a strategy akin to actively managed funds, while still maintaining the core benefits offered by ETFs. By combining the best traits of smart beta and actively managed ETFs, a solution may be on the horizon. By staying on top of these product trends, managers can more effectively gather and retain assets by differentiating themselves in a crowded market and bolster distribution efforts.

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