Smart-beta or alternative index-based exchange traded fund (ETF) strategies have quickly gained traction among financial advisors and investors seeking to enhance portfolio returns or smooth out their investment ride.
On a complimentary webcast this Thursday, How Smart Beta is Getting Smarter and Why Advisors Should Pay Attention, Eric Shirbini, Global Product Specialist at ERI Scientific Beta, Joe Smith, Senior Market Strategist at, CLS Investments, and Mike Cameron, Head of Institutional Sales of ETF Securities, look at the smart-beta landscape and help outline better investment opportunities through alternative index-based investments.
ETF Securities sees the industry is evolving with smart-beta “2.0” indices as money managers and fund companies try to enhance broad exposure.
In the beginning, investors have relied on market cap-weighted indices for their passive investment needs. However, these traditional beta indices were not designed to maximize investment risk versus returns. Instead, some observers argued that market cap-weighted indices may overexpose investors to outperforming stocks since these are the same companies that have seen their market cap grow.
After a while, smart-beta “1.0” indices came along to provide superior risk-adjusted performances, but they may have shown a tilt toward unrewarded risk factors and lack of diversification.[related_stories]