We see investors incorporating
smart beta factors into portfolios in two distinct ways, depending on the investment outcome to be achieved and how hands - on the investor wants to be in managing their allocations:
Not exact matches
As with many investing strategies, there's often a yawning gap between theory and practice, and
smart -
beta ETFs face a number of challenges tapping
into these
factors.
Luciano Siracusano, chief investment strategist at WisdomTree explains, «WisdomTree's existing suite of dividend - and earnings - weighted ETFs have typically tapped
into the
smart beta factors of value, quality and size and, in many instances, have outperformed their market capitalization - weighted benchmarks, while exhibiting relatively low tracking error against those benchmarks.
Multi-
Factor Smart Beta Strategies The low and negative correlations across the excess returns of the six factor - based smart betas indicates strong diversification benefits by combining the strategies into a multi-factor portf
Smart Beta Strategies The low and negative correlations across the excess returns of the six
factor - based
smart betas indicates strong diversification benefits by combining the strategies into a multi-factor portf
smart betas indicates strong diversification benefits by combining the strategies
into a multi-
factor portfolio.
These academically based measures, known as «
factors» have been wrapped
into ETFs which I refer to as «Style» and «Risk» based
Smart Beta ETFs.