The performance of most of the nine existing smart beta funds is largely in line with the comparable indexes so far this year. One outlier is Invesco's PowerShares Emerging Markets Sovereign Debt Fund.
The oldest smart beta ETF, which screens for maturity, is up 7.3 percent year-to-date, more than double the 3.5 percent return of the comparable, but traditionally weighted, JP Morgan EMBI Global Index. The index it tracks has had an average annual return of 8.6 percent since inception in 2007, compared with 7.7 percent for the JP Morgan index.
Smart beta products could also be more profitable for issuers, as they tend to be priced higher than more plain vanilla, broad index ETFs. A traditional Vanguard Total Bond Market ETF costs $8 in annual fees for every $10,000 invested, for example. Several smart beta funds charge about $50 for every $10,000 invested.