(New York)

One of the pioneers of smart beta investing has just gone on the record tearing down the concept. A long time quant strategist, Vincent Deluard, who helped build early smart beta funds, has lost faith in the strategy as he has seen fund providers use statistics to disingenuously prove all manner of strategies using selective back-testing. Deluard even built model portfolios to show how “dumb” constructions could lead to good results, and “smart” constructions could lead to poor results.

FINSUM: We don’t think smart beta is necessarily “smart” or “dumb”. In the end, these are really just strategies that are only as “good” as the market circumstances they are applied to. Smart and dumb is ultimately about the buyer of the funds.