Beware of smart beta ETFs. 9.75 year review. After taking into account fees and dividends, they kind of suck.

For those that do not know, smart beta etfs were sold as a way to take etfs, like the S&P 500 and weight them using “smart factors” instead of market cap to increase your returns. In January 2017, I invested \~$350 in each of several “smart beta” ETFs including RPV (S&P value weighted), RSP (S&P equal weighted), QUAL (S&P quality weighted), and MUTM (S&P momentum) with dividends reinvested. I also invested in SPY as a control group. I chose these because they had the most hype in 2017. I have a much larger portfolio, this was play money to see what would happen. Today, I sold these to for a down payment and, all underperformed SPY. SPY (basic S&P 500 mcap weight): $1382 MUTM (momentum): $1287 QUAL (quality): $1041 RSP (equal weight): $836 RPV (value): $708 To recap, these are all the same basket of stocks, they just have different amounts invested in each stock (the weights). The one that weighted based on value has almost 50% the returns as the vanilla market cap weighted etf. Now, when you look at a chart of SPY vs MUTM over 10 years, it shows MUTM has a 289% return vs SPY having a 252% return. In the real world, after dividend reinvestments and fees, my SPY returned about 295% vs the MUTM at 270%. For $1750 initial investment, my opportunity cost of investing in smart beta was $1658.