As investors search for ways to navigate an extended bull market environment, more are turning to smart beta strategies, one of the fastest growing areas of the exchange traded fund universe.
“Smart beta ETFs use a different lens than traditional index products, focusing on stocks or bonds that have potentially attractive and intuitive characteristics like low volatility, dividend yield or company quality,” according to a BlackRock iShares research note. “This approach can help investors pursue desired outcomes like staying invested through volatile markets or seeking higher income.”
The new breed of smart beta indexed-based ETFs are also seen as a perfect marriage of active and passive strategies, as these alternative index-based ETFs incorporate some of the most widely used actively managed styles in a carefully crafted, rules-based indexing methodology.
“Smart beta ETFs sit at the intersection of active and index investing, incorporating elements of both,” according to iShares.