, Columnist
Investors Can Miss the Forest for the Smart Beta Trees
Every factor carries uncertainty regardless of why it works during a certain period.
Don’t get lost.
Photographer: Lisi Niesner/Bloomberg
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A battle is raging among finance theoreticians, and investors should stay out of it.
There’s a growing recognition that a handful of active investing styles — also known as factor investing or smart beta — can be expected to beat the market over time. Among them are value (buying cheap stocks), quality (buying profitable and stable companies), momentum (following the trend) and size (buying small companies).