Scientific Beta

Funds Europe: "This risk allocation to smart beta has translated into smart factor index offerings proposed by EDHEC-Risk Institute’s venture that is dedicated to the design and production of smart beta indices: ERI Scientific Beta. This smart factor index offering is innovative compared to the traditional approaches to factor index construction in the long-only universe."

Funds Europe October 2014

"(…) This risk allocation to smart beta has translated into smart factor index offerings proposed by EDHEC-Risk Institute’s venture that is dedicated to the design and production of smart beta indices: ERI Scientific Beta. This smart factor index offering is innovative compared to the traditional approaches to factor index construction in the long-only universe. Factor indices are often constructed using a selection of stocks that are exposed to the right factor, but their weighting is not the most efficient. One can have traditional cap-weighted factor indices or indices weighted according to the stocks’ exposure to the factor. In both cases, even though the goal of the choice of alternative benchmark was to respond not only to the poor factor exposure but also to the poor diversification of cap-weighted indices, the latter problem is not really addressed by traditional factor indices. (...) It is in this spirit, as part of the Smart Beta 2.0 approach that ERI Scientific Beta offers smart factor indices that are constructed using a dual approach. Conscious that whatever the precautions for ensuring the robustness of their implementation, all diversification strategies contain risks of their own (strategy-specific or model risk), ERI Scientific Beta also proposes to diversify these risks using the concept of the multi-strategy index which has led to the offer of a diversification method based on equal weighting of the diversification strategies available on the Scientific Beta platform. These multi-strategy smart factor indices are, in our view, the ideal ingredients for the implementation of a risk allocation strategy that is also called “multi-smart-beta,” whether defined in absolute or relative terms. (...)"