Scientific Beta's expertise in the field of smart beta includes a particular emphasis on factor investing
Our smart beta offering is designed to address investors various investment objectives such as risk management, performance or sustainability dimensions in a systematic, transparent and reliable way.
Our smart beta offering includes a wide range of indices encompassing diversified multi-factor indices with optional risk control and sustainability options, factor strategy indices such as our quality, value or defensive indices, long/short single factor strategies and pure diversified strategies.
Multi-Factor Indices
Scientific Beta’s wide range of multi-factor indices aims to capture the long-term reward of academically validated equity factors – Value, Size, High Momentum, Low Volatility, High Profitability and Low Investment. Scientific Beta offers two different versions of its multi-factor indices to address to clear investment objectives:
The Diversified Multi-Factor index is designed for investors with a Sharpe ratio objective. It delivers strong exposures to all rewarded factors and get rid of unrewarded risks such as stock-specific and economic risks. The index comes with a Market Beta Adjustment option to correct for its defensiveness and capture the full market premium.
The Market-Focused Multi-Factor index is designed for investors with an Information ratio. It delivers strong exposures to five rewarded factors while staying aligned with the market cap benchmark by targeting similar sector and market beta characteristics. The index comes with a Tracking Error option to limit and control the risk of relative losses.
Scientific Beta offers sustainability options, such as the Climate Change screen. It relies on reliable, transparent and forward-looking metrics. It promotes the Net-Zero transition by incentivising carbon efficiency in all sectors of the economy and reduces climate transition risk by screening out companies that are the most sensitive to this risk.
Single Factor Indices
Scientific Beta single factor indices offer targeted exposures to consensus rewarded factors such as Value, Size, Momentum, Profitability, Investment or Quality. Our single factor indices reflect different design choices that determine how factor exposures are expressed and how risks are managed. As such, we offer long only, 130/30 and long/short single factor indices that provide the necessary flexibility to help investors achieving their financial objectives. All our single factor indices integrate strong risk management, such as market beta neutrality and are designed to offer strong exposures to the targeted factor, while avoiding negative exposures to non-targeted factors. They provide investors a tool to complement their existing portfolio to enhance their long-term performance by harvesting the premium of risk factors.
Finally, we offer a Defensive Equity index offers capital protection to investors in periods of market turmoils and delivers stronger Sharpe ratio than the market cap benchmark over the long-term. The index steers clear of industry biases, regional imbalances, and exposure to expensive or unprofitable securities thanks to our innovative two-step approach to portfolio construction combines the simplicity of stock selection with the power of robust risk models
Diversified Indices
Scientific Beta offers a set of diversified indices designed to overcome the concentration of traditional market cap benchmarks. These well-diversified strategies are more efficient than the traditional market cap benchmark, as they deliver stronger performance with lower volatility over the long-term, thanks to the diversification of stock-specific risks. We offer different diversified indices which differ from each other in the assumptions they make and the objectives they aim to achieve. The combination of these different strategies, that we call Diversified Multi-Strategy, allows diversifying the risks that are specific to each single diversified strategy by exploiting the imperfect correlation between the different strategies' parameter estimation errors and the differences in their underlying optimality assumptions.