Why 'Smart Beta' Is Really Dumb

Nobelist William F. Sharpe, speaking at a CFA Institute Annual Conference last year, said, “When I hear smart beta, it makes me sick.” And yet its popularity has swept not only the ETF universe but academia too. According to a paper by Duke University professor Campbell Harvey, hundreds of academic papers have been published about the “factors” that underlie smart beta strategies. Wharton Research Data Services Research Director Denys Glushkov identified 164 U.S. domestic equity smart beta ETFs during the 2013-2014 period...