Factor/Style Investing

Smart Beta: Not New, Not Beta, Still Awesome

Topics - Factor/Style Investing

${ numberSection } ${ text }
Smart Beta: Not New, Not Beta, Still Awesome

Though some confusion continues regarding the subject, the term “smart beta” (including “Fundamental Indexing”) is just a new way to describe some well-known and well-tested investment ideas. An article I wrote for Institutional Investor nearly eight years ago made this clear, as did a presentation I delivered at the Q Group in 2007.

However, we work in a business where it’s not uncommon to see good ideas repackaged as something new and that is not always a bad thing at all. Smart beta is the latest example. So John Liew and I have written a new article explaining that smart beta is neither new nor really beta (at least the “smart” part isn’t), but is, in our view, worth having in your portfolio.

By the way, to find those older pieces I mentioned above, which may be subsumed by John and my current work but might still be fun to look at, please look at the II article “The Value of Fundamental Indexing” and the Q Group presentation “Non-Cap Weighted Indexes.

AQR Capital Management, LLC, (“AQR”) provides links to third-party websites only as a convenience, and the inclusion of such links does not imply any endorsement, approval, investigation, verification or monitoring by us of any content or information contained within or accessible from the linked sites. If you choose to visit the linked sites, you do so at your own risk, and you will be subject to such sites' terms of use and privacy policies, over which AQR.com has no control. In no event will AQR be responsible for any information or content within the linked sites or your use of the linked sites.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management, LLC, its affiliates or its employees.


This document has been provided to you solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such.


The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Diversification does not eliminate the risk of experiencing investment losses.


Please note that changes in the rate of exchange of a currency may affect the value, price or income of an investment adversely.


The factual information set forth herein has been obtained or derived from sources believed by the author and AQR Capital Management, LLC (“AQR”) to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision.


Information contained on third party websites that AQR Capital Management, LLC, (“AQR”) may link to are not reviewed in their entirety for accuracy and AQR assumes no liability for the information contained on these websites.


No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from AQR.