What is a smart beta ETF?

Smart beta ETFs sit between traditional index funds and active funds. They follow transparent rules, but those rules are designed to target "factors" such as value, momentum, quality, size, or low volatility.

These tilts can change how the ETF behaves versus the broad market. A value ETF can lag for long stretches if growth stocks dominate, and momentum can reverse sharply in regime changes.

When evaluating a smart beta ETF, read the methodology. Different providers define factors differently, and small design choices (rebalancing frequency, screens, weighting) can create big performance differences.