Scientific Beta

ETF.com: "However, surveys conducted by the think tank and business school EDHEC Risk Institute in recent years have shown a desire among investors for a greater degree of transparency around the calculation methodology of the smart beta indexes these ETFs are based on."

ETF.com 25/05/2015

"(...) However, surveys conducted by the think tank and business school EDHEC Risk Institute in recent years have shown a desire among investors for a greater degree of transparency around the calculation methodology of the smart beta indexes these ETFs are based on. Their 2014 European ETF Survey showed only 35 percent of investors were satisfied with the level of transparency in the indexing industry and investors were strongly in favour of higher standards. In their 2015 Survey the vast majority of respondents (88 percent) said full transparency on methodology and risk analytics was necessary. According to Frederic Ducoulombier, associate professor of finance at EDHEC Business School: “While transparency is important for market indices, which aim to represent a given market or segment, it is all the more so for strategy indices that try to achieve a given risk/return objective. Indeed, while the latter can provide investors with improved risk/reward profiles or other benefits, they bring distinct risks of their own, notably the risk of periodic underperformance vis-à-vis market indices, which to date remain the primary benchmarks.” (...)"