Smart beta ETFs aim high, but there is a risk of losing traction.
Image: Lucas Bäuml
It sounds like a tempting strategy: Smart beta ETFs track an index – and want to beat the market at the same time. Being successful at this is not easy. What matters.
UAs an employed teacher, Markus Weber doesn't want to complain about his net salary of around 3,089 euros. But because he fears that he will no longer be able to cope with the stress in his mid-50s, he primarily relies on “smart beta ETFs” for his investments, in his case with a dividend strategy. “Regular payouts just make me feel good,” says the 37-year-old man, who wishes to remain anonymous. So far his strategy is working: “Since I opened my portfolio three years ago, I have always been in the black.”
It sounds simple: Take a promising index with high risk diversification and try to do a little better than the market by making a few strategic adjustments. Welcome to the world of smart beta ETFs, also known as strategic beta ETFs or factor investing.
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