News You Can Use: An ETF Securities Commentary
“Don’t Let Me Be Misunderstood”
Four Facts about Smart Beta ETFs You Wanted to Know but Didn’t Know Who to Ask
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The much lauded, oft-recorded hit single, “Don’t Let Me Be Misunderstood1,” might well have been
written as the anthem for Smart Beta Exchange Traded Funds (ETFs). Despite accounting for more than
one-fifth of the $1.7 trillion US ETF industry2, Smart Beta products still lag in education and adoption by
advice-driven investors. To help you and your clients build more familiarity with these strategies, and
understand how they can be deployed within a portfolio, take a look at these primers:

If you’re confused as to what Smart Beta is, you’re not alone. Last year, “smart beta” was
Investopedia’s single-most searched-for term3. We think a good definition is “ETFs that use
transparent, rules-based strategies to deliver better risk-adjusted returns relative to broad market cap
based indexes.”
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Smart Beta ETF managers weight their investments by measures other than market cap or price
(the “smart” component) and objectively assess the risk (“beta”) and contribution of each
individual holding in the portfolio. As a group, these ETFs occupy the space between actively
managed funds and passive strategies that simply attempt to replicate broad market returns.
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Smart Beta ETFs have soared in prominence and asset flows over the past three years, yet the
strategy is anything but new. The first Smart Beta ETF was launched more than 13 years’ ago, and
leading institutions have utilized versions of smart beta in their portfolios privately for years.

Not all Smart Beta strategies are smart. That’s because not all strategies are created equally or
with the same academic rigor. Therefore, don’t expect the same outcome from every Smart Beta
ETF. Thorough research is required to determine which strategy best complements an investor’s
portfolio and specific investment goals.
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Written by Bennie Benjamin, Gloria Caldwell and Sol Marcus
Financial Times, 020816
3 The Financial Times, 020816
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2The
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Smart Beta ETF evaluation questions from ETF Securities as of May 2016
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Important Information
An investor should consider the investment objectives, risks, charges and expenses of the
ETF carefully before investing. To obtain a prospectus containing this and other important
information, call 1-212-918-4954 or 844-ETFS-BUY (844-383-7289) or visit
www.etfsecurities.com. Read the prospectus carefully before investing.
Fund Risk: There are risks associated with investing including possible loss of principal.
The prices of the securities in which the Funds invest may decline for a number of reasons,
including in response to economic developments and perceptions about the
creditworthiness of individual issuers. The Funds do not attempt to outperform an Index
or take defensive positions in declining markets. Past performance does not guarantee
future results. There can be no assurance that the Funds’ investment objectives will be
achieved. Please read the Funds’ prospectus for specific details regarding the Funds’ risk
profile.
Diversification does not ensure a profit, nor protect against losses.
Smart Beta - Smart beta defines a set of investment strategies that emphasize the use of alternative index
construction rules to traditional market capitalization based indices.
Indices are unmanaged and one cannot invest directly in an index.
Investors buy and sell shares on a secondary market (i.e. not directly from Trust). Only market makers or
“authorized participants” may trade directly with the funds, typically in blocks of 50 thousand to 100
thousand shares.
ALPS is not affiliated with ETF Securities or with EDHEC Risk Institute Asia Ltd.
ALPS Distributors, Inc. is the distributor for the ETFS Trust.
EFS000182 5/31/2017