# Smart Beta

*Risk & Portfolio — Finicade finance glossary*

Smart beta packages factor exposures — value, momentum, quality, low volatility, size — into rules-based index funds priced between passive and active. The premise is that these premia are real and harvestable systematically. The caution is that factors underperform for a decade at a time, that published premia often shrink after discovery, and that a fund's specific construction rules matter as much as the factor label on the tin.

**Also known as:** factor investing, strategic beta, factor ETF

**Related terms:** [Efficient-Market vs Factors](https://finicade.com/glossary/multi-factor-models), [Momentum Factor](https://finicade.com/glossary/momentum-factor), [Fama-French Three-Factor Model](https://finicade.com/glossary/fama-french-three-factor-model), [Index Fund](https://finicade.com/glossary/index-fund), [Expense Ratio](https://finicade.com/glossary/expense-ratio)

Source: https://finicade.com/glossary/smart-beta