Scientific Beta

EDHEC-Risk Institute carried out a survey among a representative sample of investment professionals to identify their views and uses of alternative equity beta.

Alternative equity beta investing has attracted increased attention within the industry recently. Though products in this segment currently represent only a fraction of overall assets, there has been tremendous growth recently in terms of both assets under management and new product development. In this context, EDHEC-Risk Institute carried out a survey among a representative sample of investment professionals to identify their views and uses of alternative equity beta.

Investment practices in alternative equity beta strategies are currently evolving at a fast pace, in line with an increasing variety of product offerings, and our survey was thus not aimed at providing a definitive account of practices in this area. However, with offerings and communication by providers increasing, the discussion of such strategies rarely provides a buy-side perspective. Our survey aims to fill this gap and provide the investors’ perspective on such strategies. In our survey, we prefer the term “alternative equity beta” to refer to such strategies. The objective of our survey was to gain insights into investor perceptions relating to such advanced beta equity strategies, but also into the current uses they make of such strategies. We cover both long-only strategies and long/short strategies but focus specifically on equity investments, and deliberately omit questions concerning alternative beta strategies in other asset classes. We asked respondents about their current use, familiarity, satisfaction, and future plans with alternative beta strategies. Moreover, we gathered information on the due diligence process and the quality criteria that investors use to evaluate such strategies and assess their suitability for their own investment context.