Understanding Smart Beta

• Smart Beta strategies aim to enhance returns or manage risk differently than traditional market-cap weighted indexes by targeting specific "factors" (e.g., value, momentum, low volatility, quality, size).
• These factors may outperform or underperform in different market cycles.
• This tool helps you model a hypothetical blend based on your *expected* inputs for these components.
• Portfolio volatility calculation is simplified. For two assets with correlation, it's more precise. For more than two, or without correlation, it's a weighted average which does not fully capture diversification benefits and is a simplification.