Smart beta and certain types of factor investing is an environment where “classic bait and switch is persuasive,” is being sold based on “backtested results that don’t match reality.” Such were thoughts from a lively panel discussion at the Morningstar investment conference in Chicago. The panel discussion was, to a degree, reminiscent in tone to a 2014 panel discussion where smart beta was categorized as more a marketing ploy than a financial innovation. Look beneath the surface when understanding smart beta On the surface smart beta, which Morningstar calls “strategic beta,” can look appealing. But what looks strong on a…
Smart Beta Sold In "Classic Bait And Switch" Environment
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.
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