Korea Capital Market Institute

As smart beta ETFs have recently gained worldwide popularity, an analysis on the actual performance of flagship smart beta ETFs in the US has confirmed the following characteristics. First, not all smart beta ETFs performed as superbly as expected. In other words, no matter how superbly a product performed in a simulation using long-term, historical data, this does not guarantee the product’s future results. Second, nevertheless, smart beta ETFs provide differentiated performance from traditional passive funds, serving positive roles by offering investors an easy way for portfolio diversification and widened investment opportunities. The only concern is that investors unfamiliar to quantitative analysis may have difficulties in reaping such benefits by their own, which seemingly requires the assistance of professional portfolio management services based on smart beta ETFs.