The Last Smart Beta Paper You'll Ever (Have to) Read: Nuggets of Hope beneath the Hype

摘要

The recent surge of new products touting smart-beta strategies has sparked a backlash among some skeptical investors who believe the approach may be another fad akin to portable alpha a decade ago. In an interview with Institutional Investor Journals, Adam Berger and Conor McCarthy of Wellington Management assert that most smart-beta products in the marketplace today will fail to live up to their hype due to inherent flaws, most notably index-like constructions that are poorly matched to investor objectives. Nevertheless, Berger and McCarthy think that dismissing the concept of smart beta would cause an investor to miss out on the central idea underpinning the concept—that factors independent of market direction can provide sustainable and diversifying returns. Their full research findings appeared in The Journal of Index Investing.