Why is smart beta important? We believe that smart beta is continuing to gain momentum among a variety of constituencies, including ETF providers, asset managers and asset owners. Many asset managers are making smart beta part of their investment processes. European and Canadian public pension funds have been increasingly relying on internalized smart beta, with the largest U.S. pension funds and endowments also adopting the approach.

The purpose of this brief is to aid asset managers and owners in building their own “internal” smart beta processes with a focus on portfolio construction and optimization, including how to manage liquidity and turnover constraints and avoid unintended factor bets.