The advantages of truly ‘smart’ smart beta are manifest.
In terms of fees, it will always be far cheaper to invest via a computer than to use human thought.
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Smart beta is also rules-based, which makes it quantitative, objective and bias-free. This is key, since the human brain is wired for survival on the savannah rather than patient investment self-control.
Diligently following a rules-based investment strategy adds discipline and can help avoid some of the most common investor mistakes that have a tendency to result in buying high and selling low.
Jim Wood-Smith is head of research at Hawksmoor Investment Management
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