26 Jun Video: A Dummy’s Guide to Smart Beta
In this video, financial journalist Robin Powell explains the concept of smart beta investing.
Smart Beta is the name given to an increasing number of investment approaches that attempt to deliver a better risk and return trade-off by weighting stocks in a portfolio based on other fundamentals such as dividends or size. This contrasts with the traditional passive investing approach of weighting stocks based on their market capitalization, which can be prone to the overvaluation of certain companies. The strategy adds some amount of selectivity to passive strategies and so would cater to those investors who believe a small amount of input by an asset manager would be valuable.