Could Smart-Beta Outperform in a Falling Market?

The video discusses smart beta, a strategy that blends active and passive investing by using screens to select components. It highlights the growing adoption of smart beta in the US and Europe, emphasizing its benefits like simplicity, transparency, and low costs. The discussion also covers the challenges faced by active ETFs due to the rise of smart beta products.

What is the primary difference between smart beta and traditional market cap-weighted indices?

• Smart beta is only available in the US.

• Smart beta focuses on the largest companies.

• Smart beta is a type of mutual fund.

• Smart beta uses screens to select components.

Which of the following is a benefit of smart beta investing?

• Higher management fees

• Increased exposure to large companies

• Guaranteed returns

• Simplicity and transparency

How does smart beta help in managing risk compared to market cap-weighted benchmarks?

• By focusing on a few large companies

• By avoiding exposure to known drivers of return

• By diversifying across different factors

• By investing only in technology stocks

What challenge do active managers face with the rise of smart beta strategies?

• Higher costs compared to smart beta

• Limited access to international markets

• Lack of investment options

• Inability to use screens for stock selection

Why might smart beta strategies be appealing to investors?

• They guarantee high returns.

• They combine features of both active and passive investing.

• They are only available in Europe.

• They focus solely on technology stocks.