Scientific Beta

Scientific Beta proposes a novel approach to construct inflation-friendly equity strategies that offer protection against inflation surprises. They offer stronger and more consistent inflation protection than commonly used off-the-shelf ingredients, such as sector or style factor portfolios. We rely on firm-level measures of inflation exposure that improve robustness when compared with standard estimation approaches. We show how to construct these inflation-friendly equity strategies and how they can be designed to be used as a replacement for cap-weighted benchmarks in strategic allocation or for tactical allocations. Finally, we use two concrete investment cases to illustrate their benefits to investors.

Scientific Beta proposes a novel approach to construct inflation-friendly equity strategies that offer protection against inflation surprises. They offer stronger and more consistent inflation protection than commonly used off-the-shelf ingredients, such as sector or style factor portfolios. We rely on firm-level measures of inflation exposure that improve robustness when compared with standard estimation approaches. We show how to construct these inflation-friendly equity strategies and how they can be designed to be used as a replacement for cap-weighted benchmarks in strategic allocation or for tactical allocations. Finally, we use two concrete investment cases to illustrate their benefits to investors.