PT  - JOURNAL ARTICLE
AU  - Jason Hsu
TI  - Value Investing: <em>Smart Beta versus</em>
               <br/>
               <em>Style Indexes</em>
AID  - 10.3905/jii.2014.5.1.121
DP  - 2014 May 31
TA  - The Journal of Index Investing
PG  - 121--126
VI  - 5
IP  - 1
4099  - https://pm-research.com/content/5/1/121.short
4100  - https://pm-research.com/content/5/1/121.full
AB  - The active shares of traditional value style indexes are dominated by industry bets. They also capture less than the entire value premium; because they weight constituents on the basis of capitalization, they tend to hold large positions in overpriced stocks and small positions in underpriced (i.e., value) stocks. Smart beta strategies, in comparison, are better diversified, and they systematically buy low and sell high by periodically rebalancing to non-price-related target weights. In addition to exploiting mean reversion in prices, smart beta strategies profit from mean reversion in the value premium by effectively implementing a dollar cost averaging program.TOPICS: Mutual funds/passive investing/indexing, analysis of individual factors/risk premia, portfolio construction