Scientific Beta

Funds Europe: "Last year, EDHEC-Risk Institute said that smart beta investors were taking considerable risk because index promoters were not documenting or explicitly controlling risks within their offerings. The academics called into question the robustness of the index performance."

Funds Europe September 2015

"(…) The term ‘smart beta’ is still struggling for complete acceptance. Our panel of smart beta users and providers discuss what it is and how the market in these products is developing beyond equities. (...) Laurent Trottier, Amundi: It would be wrong to talk about this as a buzzword because there is real money and real interest flying into the strategies. An EDHEC survey showed about 25% of people surveyed already invested in smart beta and about 40% said that they will. The activities of some French pension funds and the Government Pension Investment Fund in Japan with its equity smart beta investment last year show that it is more important than a buzzword. (...) Funds Europe: Last year, EDHEC-Risk Institute said that smart beta investors were taking considerable risk because index promoters were not documenting or explicitly controlling risks within their offerings. The academics called into question the robustness of the index performance. Does the panel feel these concerns still apply? Olivier Cassin, Lyxor: Transparency is key for us. We agree with EDHEC Risk and share their concerns but anything we do, whether on our proprietary strategies or when we select indices on which we launch ETFs, requires a huge amount of research and due diligence. Neil Morgan, Capita: I think one of EDHEC’s issues was transparency, and I think they would say that if it’s not transparent and rules-based and can’t be replicated, then it probably isn’t smart beta. (...)"