Scientific Beta

Daily Alts: "According to EDHEC, investors are more acquainted with the principles of constructing smart-beta portfolios than they are with the strategies’ risks, and what drives their performance. This not only poses risk for the proper use of smart beta, but also calls into question the fairness of the way the strategies are marketed by fund companies."

Daily Alts 22/09/2015

"(…) The EDHEC-Risk Institute recently published an exhaustive study of “alternative equity beta investing” – i.e. smart beta. As a basis for the study, 128 investment professionals, intended to be representative of the industry as a whole, were asked questions regarding their views and uses of smart-beta strategies. EDHEC’s findings indicate that while investors recognize the promise of smart beta, they’re also concerned about lack of transparency and the difficulty of implementing the strategies. (...) According to EDHEC, investors are more acquainted with the principles of constructing smart-beta portfolios than they are with the strategies’ risks, and what drives their performance. This not only poses risk for the proper use of smart beta, but also calls into question the fairness of the way the strategies are marketed by fund companies. (...) Ultimately, EDHEC-Risk Institute’s findings suggest that investors expect more from smart beta strategies than merely providing “the right direction of exposure” – they expect efficient risk-adjusted returns, and they expect the strategies that generate them to be easy to implement. (...)"