Video: Smart Beta is Not New and Not Real Beta

AQR founder Cliff Asness discusses smart beta with FT’s John Authers in this video. Mr. Asness says he likes smart beta, but he doesn’t like the term – however, language is a democratic institution, and he’s accepted the name due to its widespread usage.

Nevertheless, Asness says smart beta isn’t really beta, and it isn’t really new. Some so-called “smart beta” strategies have been in use since the 1970s, and Asness characterizes “smart beta” as combining traditional beta along with an “active bet” on one or more factors that have proven effective over time. Among these: value, momentum, size, low volatility, and quality.

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