New York (HedgeCo.net) – We have featured a number of stories about how investors are looking at alternative investment strategies more and more these days. The alternative investment industry has seen tremendous growth and that growth increased in the third quarter when the market experienced the greatest volatility it has seen since 2011.
As if the growth in the industry wasn’t evidence enough, Investopedia.com announced recently that the most searched term in 2015 was “smart beta”. While smart beta funds and strategies aren’t directly involved in the alternative industry, they are far from the traditional index investing.

Smart beta funds use different quantified methods for weighting stocks in a portfolio as opposed to market weighted indices like the S&P 500. If an investor wants to simply use an index investing approach, they can invest in an ETF or mutual funds that mimics that index and they should experience a return that is the same as the underlying index. Smart beta funds build a portfolio based on any number of factors and the weighting is determined by how the stock scores in the chosen factor.

Regardless of the factors used by the smart beta funds, the fact that investors are researching the strategy is further evidence that they are seeking alternative methods to traditional passive management.

Rick Pendergraft
Research Analyst
HedgeCoVest