Active vs Smart Beta ETFs: A Comprehensive Comparison of Investment Approaches

Active UCITS ETFs, including research-based security selectors, systematic and quantitative approaches, and factor allocators, have expanded to 2.4% of all UCITS ETF assets. Their performance varies based on business cycle sensitivities, and their returns can be broken down into factor exposures, all-weather, and time-varying skills. The analysis compares their performance with the MSCI World benchmark and key style factors, highlighting how business cycles impact beta factor returns and alpha generation.