There has been so much talk lately about “smart beta,” it’s easy for investors to be confused.
Beta is a measure of whether an investment is more or less volatile (i.e. “risky”) than the overall market.
Pursuing “smart beta” means trying to achieve returns that are commensurate with the overall market at a comparatively low cost, such as by using ETFs.
So how can investors capture smart beta?
• ETFs that are not market-cap weighted can be an efficient way to capture beta rather than simply replicating an index.