Furthermore, RWJ helps investors gain exposure to two factors that have traditionally outperformed markets in the long haul. Historical data and academic studies have found that small size and value factors have outperformed over the long-term, with small-caps outpacing large-caps and value styles outstripping growth.

RWJ’s portfolio includes a 42.2% weight in small-caps and 57.2% in micro-caps. Additionally, the smart beta ETF has a 46% tilt toward the value style, according to Morningstar data.

“While RWJ is classified as a ‘core’ by most metrics, it does skew more into the Value section of the market, and underperformed in Q1,” according to OppenheimerFunds. “As markets normalize we would expect this trend to reverse, and the Fund’s outperformance to resume.”

Moreover, if the U.S. dollar begins to appreciate against foreign currencies, which may occur as the Federal Reserve embarks on interest rate hikes and the U.S. economy continues to improve, smaller companies that focus on the growing domestic economy may outperform their larger counterparts, which may see overseas profits negatively affected by a stronger greenback.

For more information on alternative indexing strategies, visit our smart beta category.