Volume 3 / Issue 4

HERE’S THE THING!

A good part of your active manager’s return is a function of the broad market in which she invests; we call that “Beta”. Another portion of your active manager’s return derives from her unique investment “Style”. Broad market “Index Funds” can capture the Beta portion of your manager’s return, but newer to the market are “Smart Beta” products that try to mimic more precisely your manager’s investment Style. Beta is cheap; Smart Beta somewhat less so. But both present a challenge to traditional active managers to deliver more than Beta, and more than Style, to justify higher fees.

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