Smart Beta is such an alluring nickname. Beta is supposed to be good, so smart beta must be even better. Now wrap that in an exchange traded fund, or ETF, and wow! But don't get stuck on the name, think about the bigger picture. With more and more smart beta ETFs coming out, consider what happens next...
What's smart beta?
The term smart beta is really shorthand for an investment approach that tries to use stock screening techniques to select stocks for, in this case, inclusion in an ETF. The idea is that by moving away from broad indexes and highlighting fundamental criteria like earnings growth or dividends, an ETF can outperform the broader market.
At its core, the idea makes a great deal of sense. After all, isn't this basically what active fund managers are doing? Taking out the human element and replacing it with a computer removes the… Read More …