Strategic-beta funds aren't as distinctive as they may first appear. It is possible to replicate most of their performance with a combination of market-cap-weighted indexes, suggesting that these funds just repackage traditional risk exposures.
It is difficult to justify the fees that some strategic-beta funds charge, which are several times higher than what it would cost to replicate their performance with market-cap-weighted index alternatives.
Even if their merits are sometimes exaggerated, many strategic-beta funds are still worth investing in. In many cases, it is more efficient to purchase a strategic-beta fund than trying to reassemble its underlying factor exposures, which often shift over time.
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