Good article. The emergence of smart beta ETF strategies have enabled an industry to grow up in which both retail and institutional investors are being miss-sold products using back-tests which are the largely product of data mining exercises.

Those back-tests are packaged up by major index providers, for a lucrative fee, to give the small ETF providers the marketing benefit of being associated with a trusted major brand. By claiming to simply "track the index", the ETF provider benefits from a loophole which enables them to present hypothetical performance as akin to a real money track record.

Unsurprisingly, the out of sample performance of many of these products has been disastrous.

A scandal waiting to happen.