Table 1: Smart Beta Index Weighting Schemes. Common Risk Factors relatively short history of most Smart Beta offerings does not facilitate definitive 

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 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.

8 Jan 2015 Low volatility, fundamental, and quality smart beta strategies vary factor risk. SPLV indexes 100 stocks from the S&P 500 with the lowest realized volatility This estimate of beta understates SPLV's historical market beta 

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 

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.

History of Equity Indexing. From Cap Weighting to Low volatility indices capture low volatility premium. 12 Cap-weighted traditional index Smart Beta. 13  Table 1: Smart Beta Index Weighting Schemes. Common Risk Factors relatively short history of most Smart Beta offerings does not facilitate definitive  Low-volatility ETFs - Weight stocks based on their level of historical or predicted When looking at the past performance of smart beta ETFs (or the indexes they  

Smart beta is a rules-based portfolio construction process. Traditional index-linked strategies rely on price to decide which stocks to invest in and how much of each to hold. This results in the traditional market cap index, which is based on the Capital Asset Pricing Model (CAPM).

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.

6 Apr 2017 Smart beta strategies deviate from traditional index funds by particularly when prior results are from simulations using historical data.

In the simplest terms, smart beta ETFs follow indexes based on alternative weighting Lack of history/track record index comprised of stocks selected princi-. 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 

6 Apr 2017 Smart beta strategies deviate from traditional index funds by particularly when prior results are from simulations using historical data.