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Momentum is a common factor in nearly all Smart Beta strategies. Momentum investors seek to ride a wave of strong performance by using recent three to twelve months data to make decisions on which stocks to sell and which stocks to buy. This practice is inherently risky because it's focused on a narrow period and eschews the modern notion of the efficient-market theory. A CFA publication, Investment Risk, and Performance echoes this sentiment of risk. The author warns, "Portfolio managers…
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Value is a primary factor in Smart Beta investing. The value investor takes a pragmatic approach to stock selection focusing on the fundamental of the company and their long-term ability to deliver profits and grow. The simple principle behind a value strategy is this: share price appreciation comes from purchasing stocks that are priced lower than the underlying value. In this post, we'll look at how this factor influences the long-term growth of a Smart Beta ETF. The best way…
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Who Are Smart Beta ETF Funds For?

Posted on: 28.10.2016
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A Smart Beta ETF strategy is for the investor seeking to outperform the total market. This new investment strategy that eschews the traditional market-cap weighting style is for those that believe superior value resides in companies with greater fundamentals. Investors engaging in a Smart Beta strategy have a close eye on the granular level, published formulas comprising the fund. This has a distinct advantage that’s less evident with traditional actively managed funds that are at the whim of a nebulous…
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Smart Beta ETFs focus on fundamentals that, in the long-term, generate value for investors. Without the appropriate due diligence, no investment decision is sound. Reviewing a Smart Beta ETF should include a look at the problems an investor may face. In this article, we'll look at some of the risk involved. Non Outlined Strategies Can Drift If a Smart Beta ETF manager doesn't have a carefully prescribed, rules-based approach, the investors can suffer from "style drift." This drifting occurs when…
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