“Smart beta” has become A hot topic in the financial world. It has certainly captured the interest of investors, underwriters and brokers.
According to Morningstar, a quarter of all exchange-traded fund investments in the first 11 months of 2013, over $41 billion, went into funds using smart beta strategies.
So what exactly is “smart beta?” It’s a concept used rather broadly to describe alternate investment strategies, which, proponents claim, address the shortcomings of both traditional managed mutual funds, and unmanaged index fund investments. Not all smart beta strategies are alike, so here’s a brief overview.