Glossary

Smart beta is an investment strategy that combines elements of both passive and active investing. 🤝

It seeks to outperform traditional market-cap-weighted indices by using alternative weighting methods or incorporating specific factors such as value, momentum, or volatility. Smart beta aims to deliver better risk-adjusted returns while still maintaining the benefits of passive investing, such as lower fees and diversification.

Example: A smart beta exchange-traded fund (ETF) might focus on high-dividend-paying stocks or stocks with low volatility, aiming to outperform the broader market while maintaining lower risk levels.

Fun fact: Smart beta is sometimes referred to as "strategic beta" or "factor investing" because it uses specific factors or strategies to build a more optimised portfolio than traditional index investing. 🧠