• Smart beta ETFs are created by apply certain “rules” to a universe of stocks—e.g., identifying stocks that are low volatility, have dividends higher than X percent, are classified as growth (or value) stocks, etc.

• Applying these rules (known as “factors”) is not a new strategy; it’s been done in mutual funds for years to create funds that fit within specific “style boxes.”

Now, this strategy is being applied in ETFs, allowing investors to pursue smart beta, while gaining the transparency, liquidity, and cost-efficiency associated with ETFs.

At Astor, we use “smart beta” ETFs as we construct portfolios using our fundamentally driven approach. Based on the prevailing economic trend, as determined by the Astor Economic Index®, we increase or decrease equity (beta) exposure in our portfolios as we pursue our objective of deliver smoother, solid returns across the economic cycle.

This article was provided courtesy of Astor Investment Management, a participant in the ETF Strategist Channel.