There has been a surge in the popularity of so-called 'smart beta' funds over the past five years - but will investors eventually lose faith?

Traditionally, managed funds and ETFs tend to weight many of their positions based on the market caps of the stocks they own. Smart beta strategies ditch that idea by weighting positions according to factors like value, momentum or dividend yield. By tilting towards a driver like value, the idea is that smart beta can harvest the premium of the value effect - ie. that many cheap stocks will eventually rise in price. But that, of course, requires patience and discipline.

This was a theme picked up in an article this week by Kevin Murphy of Schroders' Value Perspective blog. It's called Smart thinking – Smart beta may make it easier to buy and sell but that is not how value works. He points out that factors like value and momentum need a degree of mettle on the part of the investor because there can be bumps along the way. That's part of the reason why these factors have been shown to work over the long term - they need discipline that many investors don't have.

According to Murphy, if a stock falls by 30%, a value investor has the opportunity to reassess and perhaps buy more of it. But for the investor in a cheap and liquid smart beta fund, it might be far more tempting to jump out at precisely the wrong moment. Citing research from Empirical Research Partners, he notes that we humans are pretty poor at good decision making - and smart beta funds may not solve that problem.

This week at Stockopedia - in between the UK Investor Show and the Mello Workshop Event, our small-cap expert Paul Scott has been kept busy (you can read his reports here) and we wrote up fund manager Mark Slater's top picks.

Elsewhere, we've been reading: