Mazza argued that there are three distinct types of smart beta strategies, including alternatively weighted, single-factor and multi-factor.
Alternatively weighted includes a portfolio that incorporates traditional benchmarks but weighted beyond traditional market capitalization or by a company fundamental, such as revenue.
For example, Oppenheimer offers a line of revenue-weighted options like the Oppenheimer Large Cap Revenue ETF (NYSEArca: RWL), Oppenheimer Mid Cap Revenue ETF (NYSEArca: RWK), Oppenheimer Small Cap Revenue ETF (NYSEArca: RWJ), Oppenheimer Ultra Dividend Revenue ETF (NYSEArca: RDIV) and the Oppenheimer Financials Sector Revenue ETF (NYSEArca: RWW).
The single-factor approach includes specific style factors, such as value, quality or momentum, to exploit the power that these factors may provide.
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Lastly, multi-factor strategies combine two or more factors to construct portfolios that will meet specific objectives in an attempt to provide a better core holding for investors than any single-factor approach could be and capitalize on the power of diversification to meet a specific outcome.
For more information on alternative indexing strategies, visit our smart beta category.