Flexible Plan Investments (FPI), a US-based active management firm, has unveiled a smart beta ETF investment strategy, which builds portfolios of smart beta ETFs aimed at enhancing returns. The strategy, entitled Brighter Beta, uses a set of quantified rules, proprietary software, and extensive research to build the portfolios. The portfolios aim to enhance returns through capturing market inefficiencies as well as tactically positioning the portfolio ahead of directional moves in the market.

Flexible Plan Investments have launched a quants-based investment strategy focused on smart beta ETFs. The strategy seeks to determine the factors most likely to provide out-performance in the coming period.

The rising popularity of smart beta investing has resulted in the launches of over 500 individual factor-based ETFs, which now comprise Brighter Beta’s investable universe. The methodology dynamically weights chosen ETFs to maximise portfolio performance ahead of predicted market movements. In upwards trending markets, Brighter Beta increases the allocation to higher beta or cyclical investment factors; in falling markets, Brighter Beta emphasises low beta securities; and in sideways markets, Brighter Beta diversifies across multiple asset classes. FPI targets only the most liquid and tradable smart-beta ETFs during strategy implementation to reduce trading costs.

Jerry Wagner, president and founder of Flexible Plan, commented: “In the beginning, there were only a few smart beta investment options. Today there are hundreds of them. How does an investor or advisor choose? This is where we think our Brighter Beta strategy can help – Brighter Beta is essentially a whole portfolio of smart beta ETFs.”