Smart beta vs alpha – why one investing strategy is reaching new heights
- Smart beta can be defined as any index strategy that is constructed differently from market capitalisation
- Performance of the benchmark is called beta, while outperformance of the beta is known as alpha
- VanEck considers smart beta as combining best of active and passive investing for better returns
Smart beta vs alpha – is an actively managed fund superior to passive management? It is a long running debate with active funds having to beat the average of their passive peers over a certain time frame to win the game.
Diversified low-cost index funds incorporating smart beta, also known as factor investing, such as ETFs have becoming increasingly popular and are a tough player to beat. …
