Quantifying your desired outcome, such as an after fee incremental return goal, or a certain decrease in max drawdown, can further refine the asset allocation decision.
Is smart beta just equities?
There are many forms of equity smart beta, but we can apply this way of thinking to any asset class. One of the things I’m most excited about is the work we are doing in fixed income smart beta. As I wrote in my previous post discussing the iShares U.S. Fixed Income Balanced Risk ETF (INC), there are many opportunities for smart beta to re-write the rules of fixed income investing.
Have more questions? Ask away in the comments below or look out for my next post!
Sara Shores is Global Head of Smart Beta for BlackRock.
