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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