Scientific Beta

Investment Week: "Two recent EDHEC Risk Institute surveys, Investor Interest in Smart Beta and Alternative Equity Beta Investing, throw some valuable light on what the early adopters are up to in the smart beta space."

Investment Week 06/07/2015

"(...) Two recent EDHEC Risk Institute surveys, Investor Interest in Smart Beta and Alternative Equity Beta Investing, throw some valuable light on what the early adopters are up to in the smart beta space. These detailed surveys confirm my suspicion that smart beta is being deployed in a very traditional, active management style. The good news for smart beta fans is, despite my qualms, these strategies are becoming more popular with managers at the bigger institutions, especially those with funds under management in excess of £1bn. According to EDHEC, a quarter of their survey respondents already use products tracking smart beta indices, while another 40% not currently invested in these trackers are considering investing in them in the near future. (...) The EDHEC surveys also capture what I think will be the major impediments to growth for at least the next few years. Early adopters admit they are worried by the paucity of research expertise. According to EDHEC, the "average respondent uses fewer than two full-time staff to evaluate alternative beta offerings, a much lower number than used to evaluate active managers". There is also some very real concerns about the transparency of the indices and the lack of access to data and analytics. (...)"