Smart Beta ETF

Learn the definition of smart beta etf and other ETF terminology from the etf.com glossary.

Learn more about Smart Beta ETFs

Smart Beta ETFs represent a sophisticated approach to index investing, introducing factors beyond traditional market capitalization weights. These ETFs track custom indices designed to outperform standard benchmarks by incorporating specific factors such as value, size, or volatility. By deviating from market-cap-weighted indexes, Smart Beta ETFs aim to exploit market inefficiencies and deliver enhanced risk-adjusted returns. Investors turn to Smart Beta ETFs for a rules-based and systematic investment strategy that blends elements of active and passive management. This innovative approach provides a nuanced tool for constructing portfolios that align with specific investment objectives and market views.

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