Thread: How ‘Smart Beta’ Funds Outperform the Market

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  1. #1

    Default How ‘Smart Beta’ Funds Outperform the Market

    Some things just get better with age.

    Other predictions prove prescient, confirmed with the benefit of 20:20 hindsight.

    Both of these clichés apply to my views on the recent explosion in “smart-beta” exchange-traded funds (ETFs).
  2. #2


    First, over the past several years, “smart-beta” ETFs just keep getting both better and smarter. New strategies continue to emerge that are consistently outperforming traditional, market-cap-weighted indexes.
  3. #3


    Second, the trend toward better and smarter in the ETF world is something I expected would take firm hold of the investment community. What was dismissed 18 months ago as a passing fad is the driving force behind ETFs overtaking hedge funds in terms of assets.
  4. #4


    At that time, I told my audience that smart-beta ETF assets had grown an astonishing 43 during the first nine months of 2013 versus 16 growth in total ETF assets. I also wrote that these funds had attracted $45 billion in new investment during 2013.

    Fast forward 18 months, and smart-beta ETFs remain all the rage in the investment world, proving that in terms of marketplace popularity — “smarter” truly is better.
  5. #5


    At last count from Invesco PowerShares, there were about 350 smart-beta ETFs available to U.S. investors, and the total value of those assets is more than $230 billion. That figure is up from a mere 212 smart-beta funds in 2010 that had less than $65 billion in assets.

    Smart-beta ETFs now have become popular among the general investing public, and not just with savvy investors and “early adopters” like yours truly who saw their value years ago.

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