Scientific Beta

InsurerCIO: "Amenc explains with great detail the success of smart beta with institutional investors, as it largely outstrips the initial framework that was established for it. Notably, replacing the natural passive investment reference represented by cap-weighted indices."

InsurerCIO 07/01/2013

"(...) Amenc explains with great detail the success of smart beta with institutional investors, as it largely outstrips the initial framework that was established for it. Notably, replacing the natural passive investment reference represented by cap-weighted indices. Amenc comments that it may be easy to observe that cap-weighted indices have no equivalent when it comes to representing market movements or that they remain the simple reference understood by all investors and stakeholders in the investment industry. However, in the end even the biggest critics of cap-weighted indices constantly refer to cap-weighted indices to evaluate the performance of their new indices. Amenc believes the reason behind the new indices is probably the superiority of their performance compared to traditional cap-weighted indices. Everyone agrees that while cap-weighted indices are the best representation of the market, they do not necessarily constitute an efficient benchmark that can be used as a reference for an informed investor’s strategic allocation. A starting point (for active investment) or an end point (for passive investment) that offers, through its diversification, a good reward for the risks taken by the investor, Amenc clarifies. Each solution contains risks, which can be filed in two categories: systematic risks and specific risks. (...)"