Scientific Beta

Institutional Investor: "Goltz said the question at the heart of the Scientific Beta paper, entitled "The Risks of Deviating from Academically-Validated Factors," is reliability. (Scientific Beta, it must be noted, offers its own indexes that are based on factors found in the literature.) "Providers are trying to create their own versions of factors, based on proprietary studies, and they haven't been replicated by anyone else. How reliable are these so-called proprietary factors?"

Institutional Investor 05/03/2019

"(...) In the race to lead in smart beta funds, asset managers and index providers are using proprietary factors not grounded in academic research, a new paper argues. (...) Goltz said the question at the heart of the Scientific Beta paper, entitled "The Risks of Deviating from Academically-Validated Factors," is reliability. (Scientific Beta, it must be noted, offers its own indexes that are based on factors found in the literature.) "Providers are trying to create their own versions of factors, based on proprietary studies, and they haven't been replicated by anyone else. How reliable are these so-called proprietary factors? And if you don't have the same level of scrutiny applied to these proprietary factors, then you're taking a higher level of risk," he said. "Why not use what has been subjected to wide scrutiny?" (...)"