Are smart beta ETFs a good way to beat the market?

Investors trying to beat the market can use these unique rules-based ETFs. While passive indexing, sometimes termed "dumb beta," targets only market risk exposure, smart beta goes a step further, selectively zeroing in on additional factors to potentially harness greater returns.

Do smart beta ETFs outperform a market-cap-weighted index?

Smart beta ETFs attempt to blend the low costs and discipline of passive management with the potential to outperform a market-cap-weighted index. Not all smart beta strategies are created equal, and there will be performance differences based on market conditions.

What are smart beta funds?

These ETFs may focus on high income or dividend growth. Quant-based: The final camp of smart beta funds is a mixed bag. It covers everything from indexes that use a multitude of screens to create rules-based portfolios—to those funds that bet on certain attributes such as insider sentiment or spin-offs from a parent company.