Is Smart "Passive" The Future Of Active Investment?

Is Smart "Passive" The Future Of Active Investment?

Smart beta is the hot new corner of ETFs.

The sector uses an ETF structure to create a fund that customizes a benchmark by some unique parameter, such as high dividends, low debt ratios etc.

In some senses, the funds are very active as they allow human decision-making to influence portfolios.

In fact. smart beta funds allow managers to codify their investment philosophies into hard-coded rules that funds follow.

Therefore, they can be seen to be the best of both worlds, allowing an automated and tax-efficient structure to theoretically be enhanced by human insight.

FINSUM : Smart beta funds command decent fees (~0.65%+), so they are more lucrative than vanilla ETFs. It would not be surprising if much of the active management industry migrated in this direction.

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