Smart Beta: More Than Just an Investing Fad

By OppenheimerFunds via

Smart Beta investment strategies are one of the fastest-growing areas of the market. OppenheimerFunds believes Smart Beta can have the potential for better portfolio outcomes including enhanced returns, reduced risks and improved diversification.

Traditional market-cap weighted index funds have a long history and a place in many portfolios, but may be subject to limitations as investors look for more outcome-oriented approaches. To learn more about how investors can potentially benefit over the long run with Smart Beta, we spoke with Mo Haghbin, Head of Product, Beta Solutions; and David Mazza, Head of the Beta Solutions ETF Specialist and Investment Marketing teams in the latest episode of the OppenheimerFunds World Financial Podcast .

Here are some highlights from our conversation.

Brian Levitt: What is Smart Beta? Where did it come from and why is it all the rage all of a sudden?

Mo Haghbin: Smart Beta really is, in my view, more of a marketing term than an investment term. As beta strategies have evolved over time, people are looking for other ways to get beta exposures efficiently, so factor-based investing is, by most people’s views, the start of Smart Beta investing. It’s kind of the philosophical underpinnings of Smart Beta.

David Mazza: Smart Beta is the marketing term for really anything that is a beta-type product, an index-type product that is not weighted by market capitalization. When we think about what it’s doing, it’s looking to harness a factor, and really, these are style factors. I think everybody knows the Morningstar Style Box. We have large value, large blend, large growth – and down. Mid and small. But when we start moving into other types of premias, that’s really what we’re talking about here.

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