Investors are stampeding into "smart beta" exchange-traded funds (ETFs), an offshoot of standard ETFs.

The standard ETF is based on broad market indexes and balance its holdings according to the market capitalization of their components of the index.

The smart beta funds, also known as fundamental index funds, base their holdings on specific measures, such as price-earnings ratios, volatility or other fundamental measurements.

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Investors have poured almost $42 billion into smart beta ETFs during the last year, according to research firm Morningstar. "That might not be a bad thing," says Wall Street Journal columnist Joe Light.

"As companies flood the market with new variations on the products, investors should stick to low-cost versions that use proven strategies, experts say, and not fall for funds that put a high-fee wrapper on hard-to-understand strategies."

Some investing styles have outperformed over the years, including ones focused on small-cap and value stocks, Light explains.

You can get into small-cap value stocks cheaply through the Vanguard Small-Cap Value ETF, he notes. Its annual fee is only 0.1 percent.

But beware that small-cap value funds tend to pay off only over the long term, Light writes. They can often underperform for extended periods, Joel Dickson, a senior ETF strategist at Vanguard Group, tells The Journal.

Strategists at Pavilion Global Markets say that applies to smart beta ETFs as a whole.

"Every smart beta strategy we tested resulted in higher returns over 20 years," Pavilion strategists Pierre Lapointe, Alex Bellefleur and Frances Donald write in a report obtained by Barron's. "But it also came with higher volatility."

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