This research note was originally published by the CFA Institute’s Enterprising Investor blog. Here is the link. Steve Jobs’s “reality distortion field” warped Apple employees’ perception of what was technically possible. Though it led to many internal conflicts, it also drove Apple to create world-changing products like the iPhone. Finance has reality distortion fields of its own: Providers help redefine investors’ expectations of what particular investment strategies can deliver. Smart beta has an especially strong reality distortion field. Academic research detailing the benefits of factor investing strategies has helped persuade investors to allocate more than $1 trillion to smart beta products.