With bears beginning to growl and prognostications of an upcoming downturn growing ever louder, more investors are kicking the tires on smart beta strategies that combine elements of both passive and active strategies.
Smart beta still seems to mean different things to different people — and while it certainly has its share of critics, it also has its defenders, including BlackRock's Sara Shores.
“It’s a different way of thinking about investing, focusing on the true drivers of risk and return and putting them together in a way that’s designed to create better outcomes,” Shores says of smart beta. She believes fixed-income investors will shift away from longer term bonds and seek out methods that balance credit risk and interest rates.
Shores offers five predictions for smart beta investing in 2015:
1. Less arguing, more agreement on defining what it is.
2. Smart beta gets some respect as an asset class.
3. Moving on to smart beta 2.0.
4. Becoming an element in the hunt for yield.
5. The resurgence of minimum volatility strategies.
Clearly, Shores is a big believer in smart beta strategies, and she believes that, by the end of 2015, you probably will be too.
So will you? Start a discussion in the comment box below.
