Smart beta strategies have captured the imagination of investors disappointed with low interest rates, falling yields and uncertain market conditions. But, as the search for better beta moves beyond single strategies, it is increasingly clear that the quest for an investment that consistently meets investors’ needs, regardless of market conditions, might be in vain.

Smart beta has long sought to improve traditional passive funds that track market capitalisation weighted indices, such as the FTSE 100 or S&P 500, which focus investments on companies with the largest outstanding share capital. From investments providing equal weighting to index constituents to those that attempt to mimic the returns of strategies in a systematic, rules-based approach, interest in smart beta has grown rapidly.