Scientific Beta

ETF Strategy: "The rather strange resulting creature (and accompanying ETF) is echoed by research from the academic index specialists at EDHEC-Risk Institute who’ve also looked at which smart beta strategies work. Their main insight is that controlling risk is not just about minimising the most volatile stocks but also building a portfolio with as much diversification as possible!"

ETF Strategy 12/10/2013

"(...) The important point here is that this is a less concentrated, more diverse low volatility index with many more smaller names inside it. In effect it’s a mutant pairing of what a low volatility index might look like if it ran into a maximum diversification index and then included a modified equal weight tilt for good measure! The rather strange resulting creature (and accompanying ETF) is echoed by research from the academic index specialists at EDHEC-Risk Institute who’ve also looked at which smart beta strategies work. Their main insight is that controlling risk is not just about minimising the most volatile stocks but also building a portfolio with as much diversification as possible! (...)"