What Fraction Of Smart Beta Is Dumb Beta?

Though many smart beta ETFs do provide valuable exposure to idiosyncratic factors, many others mostly re-shuffle exposures to basic dumb factors. To successfully use smart beta products, investors and allocators must apply rigorous quantitative analysis. With capable analytics, they can guard against elaborate (and often expensive) re-packaging of dumb beta as smart beta, identify smart beta products that time dumb beta factors effectively, and monitor smart beta allocations to control for unintended dumb factor exposures.