Blackrock says some ETF investors are making this classic mistake

NEW YORK (May 18): It’s Investing 101 -- don’t chase performance. But that’s just what buyers of smart beta exchange-traded funds have been doing for the past month. 

For the first time in nearly four years, value ETFs have become the most shunned smart beta investment in the exchange-traded universe. BlackRock Inc., the biggest purveyor of smart beta ETFs, thinks some investors are making a classic mistake of chasing returns in growth stocks rather than following fundamentals.

“On the margin, investors are seeing continued outperformance of growth and are maybe getting a little impatient with value,” said Rob Nestor, head of BlackRock’s US iShares smart beta business. “There’s always a modest amount of performance chasing. We’d be cautious about the risk of timing.”

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