Know Your Smart Beta Fund! They Are Not All Alike Says Schwab

Smart beta funds are exploding in popularity, but not all smart beta strategies are alike, said Tony Davidow, Asset Allocation Strategist for Charles Schwab. Morningstar estimates that there are roughly $400 billion in strategic beta strategies assets under management. Popular smart beta strategies include equal weighting, fundamental weighting, minimum variance and low volatility. Davidow said strategic beta strategies can complement both market-cap and actively managed options. In order to compare funds, Davidow recommends understanding the methodology first and then comparing portfolio characteristics like sector allocations, market capitalization and value vs. growth break down.