How does Smart Beta strategy work in ETFs? To attract investors, mutual fund companies are bringing innovations in their schemes. Under this, new strategies are being made for investors. Smart Beta ETF is a special strategy in this series. While a normal ETF scheme tracks the entire benchmark index, in a smart beta ETF, the fund manager selects certain components of the index based on certain rules or factors.
Smart Insurance ETF selects the stocks included in the index on the basis of factors like value, dividend, momentum, quality, low volatility, alpha, fundamentals. For example, if there are 50 shares in the Nifty index, then the fund manager will select and invest only 10 of these shares on the basis of some factor. For example, if there are 50 shares in the Nifty index, then the fund manager will select and invest only 10 of these shares on the basis of some factor. If shares have been selected on the basis of alpha then it is called Alpha ETF. If the shares have been selected on the basis of quality then it will be called quality ETF.
Smart beta ETFs can give better returns than ordinary funds because they do not invest in all the stocks included in the benchmark like a normal index, but invest in the index by applying filters like alpha and momentum. This process in ETF is called smart insurance strategy.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.) Smart Beta is a type of strategy in which fund managers choose selected stocks based on certain factors. In this article, we inform you about the factors for stocks selection in smart beta strategy. Let’s see how these funds give returns compared to plain index funds. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
