Smart Beta & Factor Indexes. What is the index objective? Factor indexes aim to achieve for underlying indexes an efficient & controlled exposure to ‘target factors’ - stock level characteristics that are widely considered as important in explaining a stock’s risk and return. Understanding the role relative valuations play in factor investing and smart beta strategies is important. Putting that knowledge into practice in the real world of asset management is critical. We show how valuations can be applied in forecasting factor and smart beta returns.

8 Jun 2017 Only 30% to 40% of smart beta ETFs beat the market: UBS. Index investors are pumped as current market's performance increasingly favors them  5 Dec 2017 Investors are piling into smart beta indices that weight companies The more established factors have more historical data to measure their  First, Smart Beta strategies can be compared to a cap-weighted index, which is Investors also need to be cautious, as the history of style investing may repeat. 1 Sep 2016 Smart beta is a relatively new term, but its roots stretch back several decades. Since traditional index funds simply capture beta, these new  13 Sep 2017 Betterment's smart beta portfolio is meant for investors who seek to by 10%, the S&P 500 Momentum Index lost 21% (see chart above). 17 Jul 2018 That smart beta index has an incredible history of actually beating the S&P 500 by well over 1% per year and delivering that outperformance 

26 Oct 2018 Beta history. Before smart beta, there was beta. Beta was based on a very simple premise worked out by university researchers in the 1960s, 

Smart beta adds value by systematically selecting, weighting, and Traditional index-linked strategies rely on price to decide which stocks to invest in and and inexpensively and has been shown to have good historical efficacy in regions  11 Apr 2019 Smart beta strategies seek to passively follow indices, while also For instance, this may involve an analysis of historical performance and the  29 May 2019 Are smart beta strategies outperforming over the long term? Investors want to outperform market-cap-based indices, and they believe smart beta can where we lay out the historical returns of various popular smart beta  The chart below shows the assets under management in smart-beta products as of factor exposure by combining them with a short position in the index future. Leverage proprietary and premium content to transform and safekeep your smart beta fund ideas into a suite of unique, rules-based quantitative indices.

Introducing factors and smart beta. Factors – well known, well documented, well understood investment characteristics – are present in all portfolios. Factors are not new. What is new is the way we access these investment ideas, such as through Factor exchange traded funds (ETFs).Factor ETFs capture the power of factors, delivering them in a cost-efficient structure, revolutionizing the

Chart 1 shows that these three indices have substantial sector weight deviations from the S&P 500 index as at the end of December 2017. Chart 1: US income  Market-cap indexes serve valuable benchmarking roles: Active managers can tout their history of outperforming a benchmark as a gauge of their value, or the  Smart Beta strategies seek to passively follow indices, while also taking into account alternative weighting schemes such as volatility, liquidity, quality, value,   portfolio construction and historical tendency to capture market inefficiencies. Smart Beta portfolios outperform their respective benchmark index on a  31 May 2019 Smart beta has come under pressure in recent years due to poor flows and were launched as ETFs only in recent years and have a limited price history. We, therefore, create smart beta indices going back to 1990 by  8 Jun 2017 Only 30% to 40% of smart beta ETFs beat the market: UBS. Index investors are pumped as current market's performance increasingly favors them 

Smart beta defines a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices. Smart beta emphasizes capturing investment factors or market inefficiencies in a rules-based and transparent way.

No fee: Smart Beta is available for no additional fee above and beyond the standard Wealthfront advisory fee. This is significant, as no other issuer of a factor weighted index funds does this. In fact, they often charge an incremental fee at least equal to the benefit of the feature. All of the benefit goes to you with Smart Beta. 7 Smart Beta Funds to Beat the Market One of these seven smart beta investment ideas might juice your index fund returns. While factor investing may have a lot of history behind it, Arnott famously pointed out two years ago in his research paper “How Can ‘Smart Beta’ Go Horribly Wrong?” that there is a lot of Overview of smart beta strategies. Smart beta investing uses a blend of both passive and active investment disciplines. It weights the constituents of a market-capitalisation index by a factor(s) other than market capitalisation – such as value, dividend yield, momentum, growth, quality or volatility – to outperform the index, lower the downside risk or increase the dividend yield. Smart beta strategies typically capture factor exposures using systematic, rules-based approaches, such as an index. ETFs, popular vehicles for rules-based strategies, are cost effective ways to access smart beta strategies. As ETFs, smart beta strategies can be efficient and low cost ways to complement or replace active funds and broad market index funds when seeking to enhance a portfolio 3. Smart beta indexes are different from their traditional counterparts. Smart beta applies a series of objective, rules-based screens to each index's component company. The S&P 500® High Beta Index measures the performance of 100 constituents in the S&P 500 that are most sensitive to changes in market returns. The index is designed for investors initiating a bullish strategy or making a directional bet on current markets.

22 Sep 2016 How should an investor in a factor (or “smart beta”) index judge its of our low volatility indices based on their historical volatility; the record 

5 Dec 2017 Investors are piling into smart beta indices that weight companies The more established factors have more historical data to measure their  First, Smart Beta strategies can be compared to a cap-weighted index, which is Investors also need to be cautious, as the history of style investing may repeat. 1 Sep 2016 Smart beta is a relatively new term, but its roots stretch back several decades. Since traditional index funds simply capture beta, these new  13 Sep 2017 Betterment's smart beta portfolio is meant for investors who seek to by 10%, the S&P 500 Momentum Index lost 21% (see chart above).

Smart beta refers to an enhanced indexing strategy that seeks to exploit certain performance factors in an attempt to outperform a benchmark index. In this sense, smart beta differs fundamentally from a traditional passive indexing strategy.