Scientific Beta

A special executive briefing taking place in Paris on May 22, 2013 which will present ERI Scientific Beta, its foundations and contribution in the area of smart beta index analysis and construction, and its revolutionary business model for the investment industry (presentation in French).

The growing interest in beta in the investment industry has led not only to considerable development of traditional passive investment based on very low cost replication of market indices, but also to genuine innovation in the area of indices. In a concern to employ the best references for their investments, more and more investors and asset managers have been adopting new forms of better diversified indices, which are consequently described as advanced or smart beta benchmarks.

With positioning that is more focused on performance than representativeness, and a quality that is always measured from a starting point of distancing itself in a “smart” way from a cap-weighted scheme that overconcentrates the investment in a very small number of effective stocks, and which necessarily refers to a goal of good diversification, smart beta is not a substitute for market indices as a measure of the market or a summary of investor opinions, but part of an investment logic. Smart beta is the representation of an investment strategy that the investor wishes to carry out.

The first generation of smart beta benchmarks (1.0), and notably the indices constructed from the stocks’ economic characteristics, such as fundamentally-weighted indices, are embedded solutions which do not distinguish the stock picking methodology from the weighting methodology. As such, they oblige the investor to be exposed to particular systematic risks which represent the very source of their performance.

More generally, the vast majority of smart beta benchmarks offered to investors in recent years have been sold on the sole basis of their capacity to outperform cap-weighted indices, without their methodologies explicitly controlling the risk of these new weighting schemes.

The second generation of smart beta (2.0) clearly distinguishes between the stock selection and weighting phases. In doing so, it enables investors to choose the risks to which they wish or do not wish to be exposed. More globally, the smart beta 2.0 approach integrates ex-ante control of the absolute and relative risks of new forms of weighting schemes. As such, it is an essential element in improving strategic allocation in the equity asset class.

It is on the basis of these advances that EDHEC-Risk Institute is launching in 2013 a new initiative to promote greater transparency not only of the benefits, but also of the risks and limitations of new forms of weighting equity indices.

Finally, as a not-for-profit academic institution, EDHEC-Risk Institute also wanted ERI Scientific Beta to be an opportunity to make available free of charge to all institutional investors, 30 indices representing the most popular forms of smart beta.

At a special presentation taking place in Paris on May 22, 2013, Noël Amenc, CEO of ERI Scientific Beta, will present ERI Scientific Beta, its foundations and contribution in the area of smart beta index analysis and construction, and its revolutionary business model for the investment industry.

Programme

Please note that the presentation will be held in French.

Registration

Participation is complimentary and by invitation only.

To register, please visit https://www.regonline.sg/exec_briefing_paris.

For further information, please contact Séverine Anjubault at: severine.anjubault@scientificbeta.com or on: +33 493 187 863.