This Introduction to Smart Beta examines:
- The history of Smart Beta, with an explanation of how it sits at the intersection of active and passive investing.
- The diversification and risk management benefits these strategies can provide.
- The variety of Smart Beta approaches available – including funds that use alternative-weighting strategies, such as revenue, and others that focus on the factors that have been demonstrated to drive long-term stock returns.
- The ways to incorporate these strategies into an overall investor portfolio.
This overview answers many key questions investors and advisors may have about Smart Beta, while explaining why these investment approaches have garnered so much recent interest.
Mutual funds and exchange traded funds are subject to market risk and volatility. Shares may gain or lose value. Alternative-weighting approaches (i.e., using factor weighting and revenue as a measure), while designed to enhance potential returns, may not produce the desired results. The Fund seeks to provide exposure to investments based on the following factors: value, momentum, quality, low volatility and size, and to weight such factors based on changes in the economic cycle. There can be no assurance that doing so will enhance the Fund’s performance over time. Investing significantly in a particular region, industry, sector or issuer may increase volatility and risk. Fund returns may not match the return of its respective index, known as non-correlation risk, due to operating expenses incurred by the Fund. Because the Fund has the potential to be rebalanced monthly, portfolio turnover may exceed 100%.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.