What Makes a Good Smart Beta Strategy?

Smart beta strategies offer the potential for better-than-market returns along with the benefits of traditional index-linked strategies that include broad market exposure, rules-based implementation, and low cost. To keep the “smart” in smart beta, the approach should be systematic and rules based, proven to offer the potential of outperforming the market. Interestingly, research has shown that non-cap-weighted investment strategies AND their inverses produced similarly superior hypothetical results. If that is the case, how should investors differentiate one from the other?