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REALLY SMART -OR- NOT REALLY
By Dr. David E. Marcinko MBA CMP®
SPONSOR: http://www.CertifiedMedicalPlanner.org
Smart beta investment portfolios offer the benefits of passive strategies combined with some of the advantages of active ones, placing it at the intersection of efficient-market hypothesis and factor investing.
Offering a blend of active and passive styles of management, a smart beta portfolio is low cost due to the systematic nature of its core philosophy – achieving efficiency by way of tracking an underlying index (e.g., MSCI World Ex US). Combining with optimization techniques traditionally used by active managers, the strategy aims at risk/return potentials that are more attractive than a plain vanilla active or passive product.
CITATION: https://www.r2library.com/Resource/Title/0826102549
Originally theorized by Harry Markowitz in his work on Modern Portfolio Theory (MPT), smart beta is a response to a question that forms the basis of MPT – how to best construct the optimally diversified portfolio. Smart beta answers this by allowing a portfolio to expand on the efficient frontier (post-cost) of active and passive. As a typical investor owns both the active and index fund, most would benefit from adding smart beta exposure to their portfolio in addition to their existing allocations.
Financial beta: https://medicalexecutivepost.com/2021/05/12/so-what-is-financial-beta-granularly/
Assessment: The smart beta approach is an arguably perfect intersection between traditional value investing and the efficient market hypothesis. But, is it worth the cost?
More: https://www.bloomberg.com/opinion/articles/2018-06-08/smart-beta-performance-isn-t-worth-the-cost
ALPHA versus BETA Podcast: https://youtu.be/dP_23vKJ3HQ
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INVITE DR. MARCINKO: https://medicalexecutivepost.com/dr-david-marcinkos-
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Filed under: Healthcare Finance, Investing, Portfolio Management, Touring with Marcinko | Tagged: active management, David Edward Marcinko, EMH, financial alpha, Financial Beta, Investing, Markowitz, MPT, passive management, smart beta |
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