Investors should allocate about 5-10% to smart-beta funds, says expert

These funds have done better over a year, in a volatile market

Popular in developed markets, Indian fund houses are now increasingly looking at smart-beta funds. These low-cost schemes replicate indices that are designed based on different investing strategies such as value, low volatility, etc. SBI Mutual Fund has launched SBI-ETF Quality. The exchange-traded fund replicates Nifty200 Quality 30 Index, which comprises the top 30 companies based on return on equity (RoE), financial leverage (debt-to-equity ratio), and their earnings growth.

Every fund manager tries to select the best quality stocks and invest in them, but it’s finally based on their judgment. “The SBI-ETF Quality does the same without any human invention. The Nifty200