All trading involves risk. Losses can exceed deposits.

Smart beta definition

All trading involves risk. Losses can exceed deposits.

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A smart beta is an investment strategy used by a certain type of exchange traded fund (ETF) that takes more factors into account when choosing assets for the benchmark than a traditional ETF.

Rather than attempting to track the price of an index exactly, smart beta ETFs include extra rules that take factors like risk management and diversification into consideration, with the ultimate aim of enhancing risk-adjusted returns.

Although they’re a relatively new product, smart beta ETFs have been growing in popularity in the last ten years.

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