Instead of tracking the markets with broad market-capitalization-weighted investments, investors can potentially enhance returns through new smart-beta exchange traded fund strategies.

On the recent webcast, Rethinking Alpha: New Avenues to Portfolio Enhancement, Mitch Zacks, Director of Quantitative Modeling for Zacks Investment Research, argues that investors can generate alpha through passive index-based ETFs that track actively managed investment styles.

For example, Zacks and ETF Securities have partnered to provide the ETFS Zacks Earnings Large-Cap U.S. Index Fund (NYSEArca: ZLRG) and the ETFS Zacks Earnings Small-Cap U.S. Index Fund (NYSEArca: ZSML), two alpha focused generating ETF methodologies. [ETF Spotlight: Equal-Weight, Small-Cap Earnings Strategy]

Specifically, the two ETFs focus try to generate potential alpha through focusing on earnings.

“The trend in earnings estimate revisions offers investors a potential solution for capturing future alpha in stock market returns,” Zacks said. “Zacks Investment Research is a pioneer in company earnings dissemination, focusing on selecting stocks with the best future earnings potential.”

However, Zacks points out that earnings estimates can only do so much. Consequently, through Zacks Research, the company selection will go through earnings estimates revisions to determine the strength of the buy signals, which tends to have a more objective view than many traditional broker recommendations.

Specifically, Zacks outlines four factors that stock picks are rated on: The extent at which all analysts are revising earnings estimates; the size by which the consensus has changed; the difference between the most accurate estimate and consensus estimate; lastly, the few quarters of EPS surprise. The research team only picks sticks with the strongest buy convictions.