For over a decade, exchange-traded funds have been using the label “smart beta” to describe rules-based indexes that differ from those using traditional market-cap weighting. Now a leading mutual fund group is joining the smart-beta movement with a fund that uses a very long-term rearview mirror to determine whether sectors are undervalued or overvalued.

The equity side of the DoubleLine Shiller Enhanced CAPE fund follows the Shiller Barclays CAPE U.S. Sector Index, a value index constructed using the cyclically adjusted price-to-earnings ratio (CAPE) rather than the more traditional trailing-12-month price-to-earnings ratio. (For more background on CAPE and the views of its creator, noted economist Robert J. Shiller, see the sidebar.) That “smart beta” index is paired with a low-volatility, actively managed fixed-income portfolio.

The fund is co-managed by Jeffrey Sherman, 38, and DoubleLine CEO Jeffrey Gundlach. Sherman admits that initially he was skeptical about the smart-beta label because it seemed like a catchall phrase for a lot of different methodologies that had little in common with each other. “Now I’ve accepted it as something that has caught on in the lexicon of financial jargon,” says Sherman, a mathematician whose long hair and beard seem more at home in the academic world than the conservative mutual fund industry. “The label fits because the fund is based on an index that is systematic, rules-based, uses transparent methodology and is not market-cap weighted.”

Even though index construction is far less colorful than, say, fund managers scouring the globe for promising companies, the DoubleLine Shiller Enhanced CAPE fund has managed to accumulate $440 million since its inception in October 2013, and most of that has come from RIAs. Its strong performance has been an obvious draw. In 2014, its first full year of operation, the fund outperformed the S&P 500 index’s 13.68% total return, with its institutional shares climbing 17.86%.