While of recent invention, the catch phrase “Smart Beta” represents an extension or evolution of “quantitative investment” techniques of decades-old lineage. The revolutionary movement lies in Smart Beta’s democratization of these techniques and making them transparent to investors.
By way of metaphor, consider the smart phone. When smart phones were introduced, they brought together pre-existing technologies. Rather than inventing the cellular telephone, the calculator, the digital music player, the digital camera, e-mail or GPS navigation, smart phones packaged these devices and applications together in one easy-to-use device.