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New Families – Smart Beta

smart beta cube

Its hard to open a newspaper (or news app) these days and not see something about “smart beta,” “liquid alternative,” “strategic beta,” etc etc. There’s hot… Red hot right now. As such, we’ve created a FT Cloud family grouping for these funds. (see the instructions below to find the new family)

So, what is a smart beta ETF? Generally, its an ETF that weights its holdings by something other than market capitalization. They’re generally marketed as a hybrid between passive investing and active investing.

For example, RSP – Guggenheim S&P 500 Equal Weight ETF hold all companies in the S&P 500, but instead of market weighting the assets, RSP hold equal weights of all 500 assets.

Another good example is MTUM – iShares MSCI USA Momentum Factor ETF. It operates largely like the FT Cloud momentum model. The ETF holds approx 100-150 large and/or midcap stocks that have shown the highest 6 and 12 month total returns, then it market capitalization weights those funds for its final holdings. Its rebalances the holdings approximately once a quarter.

The smart beta segment is already big and its growing. According to FactSet there’s approx 450 strategic/smart beta ETFs currently in the market and there’s approx $450 billion invested. That’s up from 213 funds managing $132.5 billion in assets in 2009. FastTrack’s got 480 ETF (and some funds) that qualify as “smart beta” per our analysis. So, enjoy. Let us know what you think.

How to see the Smart Beta Family in FT Cloud:

First, sign into FT Cloud (sign up for a free trial here), click the FT Cloud tab, then press the “Load Family” button in the upper right corner.

smart beta load family

Next, expand the top tree level “Funds,” navigate to the bottom tree called “Smart Beta” and expand. Double click the families to load on the the right hand grid (press the load button to add to the spreadsheet)

smartbeta family selection

Also, to mix and match families, try using the sieve feature!