The Big Theme 

Can smart beta funds help you defend your portfolio?

Can smart beta funds help you defend your portfolio?

The debate between active and passive investing always tends to rear its head in times of equity market volatility, as we have experienced thus far in 2018. It does not always have to be so binary – investors can use passive products such as exchange traded funds (ETFs) to get very specific market exposure. These more specialist ETFs are known as 'smart beta' and allow investors to get the benefits of cheap passive fund construction, but do not simply build a portfolio by weighting to stocks based on their size. Smart beta funds can weight to stocks based on algorithms, or rules, like which companies exhibit the most of a market factor such as value, growth potential, volatility, momentum or income. They can also provide passive exposure to a specific sector or theme.

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