As individual investors flock to so-called smart-beta funds, the question is whether they are doing so with all of the wisdom the strategy demands, or simply chasing the latest trend the financial industry is promoting.
Smart-beta funds—which are also called strategic-beta funds or factor-based funds by some—track indexes in much the same way passive investments do. The difference is that instead of weighting holdings by market capitalization, the funds select securities with qualities or “factors” that research suggests…
