Smart beta is latest investment trend, marketed as a new way to diversify and reduce risk. But is smart beta really the best way to achieve your investment goals? Here we look at smart beta ETFs in Australia – what they are, how they are built and how they’ve performed.
It’s nearly impossible to read the financial news or an investment newsletter these days without coming across the term “smart beta”.
Smart beta – also known as strategic beta, alternative beta, fundamental beta, advanced beta, enhanced beta, and probably a few other names – aims to combine elements of passive index investing and active fund management to deliver the best of both worlds: transparency, broad diversification, and market-beating returns – all at low cost. What more could you ask for?
But before you throw all of your savings into the latest smart beta product, it’s worth digging a bit deeper into what smart beta really is.
Smart beta is all about index construction which refers to which stocks (or other assets) make up an index and their relative size within that index…
So what exactly is an index?
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