Keeping pace with terminology in the world of investing can be daunting for most investors, so before we dive right in, let’s spare a few moments to grasp the backdrop and context that have led to the emergence of the term ‘smart beta’, after a quick look at what it is. In a nutshell, smart beta sits at the intersection of active and passive investing. While active investing is an ideology that advocates cherry picking and monitoring investments, passive investing most commonly involves investing in a portfolio of securities that replicates an index, without trying to take advantage of ‘mispricing’. For those unfamiliar with these terms, the following sections should help. The reality of active investing – it’s a mixed bag While both – active and passive – approaches have their merits, they also have drawbacks, and to understand this in a bit more detail, let’s start with active investing, the older and more traditional style of investing, with a focu...