Scientific Beta

aiCIO: "Investors should only pay for factor-based indexes if they prove they are superior to traditional cap-weighted benchmarks—so says EDHEC Risk Institute (ERI). ERI Scientific Beta, the nonprofit’s smart beta index provider, has introduced a new pricing model for its benchmarks that it claims will “disrupt the traditional model of fixed fees.”"

aiCIO 01/06/2016

"(...) Investors should only pay for factor-based indexes if they prove they are superior to traditional cap-weighted benchmarks—so says EDHEC Risk Institute (ERI). ERI Scientific Beta, the nonprofit’s smart beta index provider, has introduced a new pricing model for its benchmarks that it claims will “disrupt the traditional model of fixed fees.” (...) Amenc was bullish in his group’s ability to make this fee approach stick. Speaking to journalists in London last week, he pointed to ERI’s well-established business, which has $10 billion of assets linked to its indexes. “The fixed costs are already paid,” Amenc said, adding that ERI’s nonprofit status meant it was not required to take more in charges than necessary. Replication costs are “probably nothing,” he argued, meaning the implementation of a service should be the only thing for which clients pay. “We are aligning remuneration with the promise of outperformance, and affirming our confidence in the robustness of our indexes,” Amenc said. (...)"