Welcome to a new era of investing. As financial markets continue to evolve and become more sophisticated, it’s essential that our investment strategies evolve in tandem. Today, we’re thrilled to introduce our latest offering, developed in partnership with MarketGrader — the BBAE MarketGrader Smart Beta Portfolios. This revolutionary approach to investing harnesses the power of data and intelligent design to deliver superior risk-adjusted returns.
Breaking Down ‘Smart Beta’
But let’s start with the basics. What exactly is smart beta? In its simplest form, smart beta represents a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices. In other words, smart beta strategies are designed to add value by strategically choosing, weighting, and rebalancing the companies built into an index based on objective factors.
Traditional market-cap weighted indices, like the S&P 500, weight companies based on their size — the larger the company’s market cap, the larger its weight in the index. While this approach has its merits, it also has limitations, one being that it can lead to overexposure to overvalued companies while underexposing undervalued ones.
Smart beta takes a different approach. Instead of weighting companies solely on size, smart beta strategies use alternative weighting schemes based on factors such as company fundamentals (e.g., earnings, dividends, sales), risk, or some other custom criteria. The goal is to exploit inefficiencies or systematic risks in the market in order to deliver superior risk-adjusted returns.
For more details on smart beta, read our Smart Beta Primer here.
Why Smart Beta?
So, what are the potential benefits of smart beta? Here are a few:
- Lower Risk: Smart beta seeks to reduce volatility, indicating lower risk, through strategic security weighting.
- Higher Returns: By focusing on factors like company fundamentals, smart beta uncovers undervalued sectors, generating superior returns.
- MarketGrader’s Track Record: With over 15 years of delivering smart beta indexes that lower risk and provide higher returns, MarketGrader’s strategies have withstood various market conditions, demonstrating robustness and resilience.
- Transparency: Unlike active funds, smart beta strategies offer complete transparency, allowing investors to own securities directly in their own account.
Smart Beta in the Current Investment Landscape
In today’s rapidly changing investment landscape, the appeal of smart beta is growing. Investors are increasingly looking for investment solutions that can provide risk-adjusted performance and diversification at a reasonable cost. With their unique blend of passive and active investment strategies, smart beta portfolios are well-positioned to meet these needs.
Moreover, as technology continues to reshape investing, the ability to capture and process vast amounts of data enables more refined and effective smart beta strategies. These strategies can identify and exploit market inefficiencies in ways that were not possible just a few years ago.
BBAE & MarketGrader: A Partnership for Smarter Investing
At BBAE, we’re committed to offering our clients innovative, effective investment solutions. That’s why we’ve partnered with MarketGrader, a pioneer in the smart beta space, to launch our new product, the BBAE MarketGrader Smart Beta Portfolios.
MarketGrader indices have a 15-year track record of delivering superior risk-adjusted returns across global markets. Their proprietary methodology rates every investable company in the U.S., rewarding companies with sustainable growth that trade at reasonable prices, with a strict focus on quality, regardless of size, sector, or business model.
This partnership represents a significant step forward for investors on the BBAE platform. By combining our investment expertise with MarketGrader’s proven smart beta approach, we’re able to offer a product that aligns with the changing needs and expectations of today’s investors.
In the coming days, we’ll delve deeper into the mechanics of these smart beta portfolios, explaining in detail how they’re constructed and how they can fit into your investment strategy. We’ll also introduce the different portfolio options available, each designed to cater to a distinct set of investment goals and risk tolerances.
Our vision for BBAE was to create a future-forward investment platform that prioritizes our customers’ long-term financial growth. We wanted to build a platform that genuinely represents our commitment to our customers — a platform that is a testament to our dedication to their financial prosperity.
The launch of our BBAE MarketGrader Smart Beta Portfolios further showcases this commitment. This new offering is not just another product; it’s a reflection of our dedication to innovate and provide what truly matters for our customers. It embodies our consistent effort to create strategies that mitigate risk, enhance returns, and uphold transparency, all while being cost-effective.
As we move forward, we are eager to help you explore how these smart beta portfolios, built on a foundation of BBAE’s customer-first values and MarketGrader’s proven track record, can be an integral component of your investment strategy, potentially unlocking superior risk-adjusted returns.
Stay tuned as we continue to innovate, always with our primary focus in mind — doing what’s best for our customers. Their long-term wealth growth is, and will always be, at the heart of BBAE.