On September 1, Columbia Management Investment Advisers, LLC acquired Emerging Global Advisors, combining strengths and expertise to expand ETF offerings.

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Strategic Beta Education

WHAT IS STRATEGIC BETA?

  • Strategic Beta, sometimes called Smart Beta, is an approach to indexing that weights components by criteria other than market capitalization. A portfolio weighted by market-capitalization alone can expose a portfolio to the risks of the larger weighted companies.
  • Strategic Beta products deviate from a traditional, strictly passive market portfolio, but do so in a rules-based, transparent, and relatively low-cost manner.
  • Strategic Beta products represent a middle ground on the active-to-passive asset management spectrum as seen by the graphic below.
Pricing Curve

Source: Columbia Management Investment Advisers, LLC, June, 2016 For illustrative purposes only.

POTENTIAL BENEFITS OF STRATEGIC BETA PRODUCTS

All the benefits of traditional ETFs
  • With Strategic Beta products, you still get the benefits of a traditional, passive ETF portfolio, such as intra-day liquidity, portfolio transparency and greater tax-efficiency
Identify the highest-quality opportunities
  • By applying rules based, fundamental and factor based filter process to identify what we believe to be the highest-quality opportunities within the index, provides the potential to enhance the returns and minimize the risk above traditional ETF portfolios.
    • Factors such as value, momentum, growth or ‘quality’
    • Weightings based on dividends, equal-weight, balance sheet items (e.g. cash flow)
    • Risk-adjusted or outcome oriented targets (e.g. low volatility)
Lower cost than traditional active portfolios
  • Strategic Beta products are a source of risk managed return at a lower cost than traditional active management products.

    Source: Columbia Management Investment Advisers, LLC, June, 2016.

Ordinary brokerage commissions apply. There is no guarantee that this strategy will lead to successful investing.