SMART BETA ETFs

OVERVIEW

A smart beta ETF is when an issuer applies a rules-based approach to a particular set of securities, usually expressing a conviction about which factor philosophy – value, quality, size, volatility and so on – will deliver alpha versus an equivalent, non-factor-adjusted exposure. With its popularity peaking and troughing over time, smart beta or factor investing has remained a hotly-discussed area of the investment world, with its academic roots fitting comfortably into rules-based ETF structures that are either passively or actively managed.