Ex-Bridgewater Quant Says Smart Beta ETFs Use Factors All Wrong
- Strategy works for weeding out worst stocks, not picking best
- Shanbhag started Greenline Partners after leaving Bridgewater
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The smart beta exchange-traded fund you just bought may not have been the wisest idea -- at least according to an upstart quantitative investing shop with ties to the world’s biggest hedge fund.
That’s because the utility of investing exclusively based on factors like momentum, value and low volatility is exaggerated by most providers, according to Maneesh Shanbhag, who co-founded $500 million Greenline Partners LLC after five years at Bridgewater Associates LP. In fact, he says, factors only work as a way to find stocks to bet against.