What is Smart Beta?
Any ETF that follows a non- traditional market cap index in an effort to produce superior risk adjusted returns.
Smart Cost of Smart Beta
At Toroso We have developed a proprietary software to evaluate the cost of Smart Beta in a fast, efficient way. It is a Four Step Process that you can learn here, in our ETF Prism Report.
STEP I
Set a Benchmark
With a high correlation.
STEP II
Determine the Overlap
Make sure you are producing something that is different to give you the possibility to outperform.
STEP III
Calculate the difference
Apply the difference in active share to the difference in expense ratio.
STEP IV
Compare and Contrast
Smart cost should be equal or less than the expense ratio.
