Smart beta is a set of investment strategies that emphasize the use of alternative index construction rules to traditional market capitalization-based indices. Smart beta strategies aim to obtain alpha, lower risk, or increase diversification along factor dimensions in a rules-based and transparent way. Here are some key points about smart beta:

• Smart beta combines the benefits of passive investing and the advantages of active investing strategies.
• Smart beta ETFs (exchange-traded funds) screen and weight securities based on factors other than market capitalization.
• Smart beta strategies seek to enhance returns, improve diversification, and reduce risk by investing in customized indexes or ETFs based on one or more predetermined "factors".
• Smart beta products vary, and so do the reasons to include or not include them as part of an overall investment strategy.
• Smart beta strategies have generated considerable interest from institutional investors in the wake of the 2008 financial crisis, and as of April 2019, there was approximately $880 billion invested in smart beta funds.
• Smart beta ETFs can be broken down into three subcategories: risk-oriented, return-oriented, and other.

Overall, smart beta is a way to invest in the stock market that aims to outperform traditional market capitalization-based indices by using alternative index construction rules and capturing investment factors or market inefficiencies in a rules-based and transparent way.