Scientific Beta

Insurance Times & Investment News: "The Smart Beta 2.0, approach is therefore based on careful analysis of the systematic risk factor exposure, strategy-specific and relative risk associated with deviating from a cap-weighted index (such as tracking error), which allows investors to choose their risk exposure areas. "

Insurance Times & Investment News 27/09/2013

"(...) Smart beta strategies, or passively-constructed style portfolios, are cost effective and follow rules-based portfolio construction principles aimed at outperforming general market-cap indices. Utilising a mechanical investment strategy, Smart Beta 2.0 (developed by the EDHEC Risk Institute) deviates further and incorporates risk management aimed at better-controlling these divergences. (...) The Smart Beta 2.0, approach is therefore based on careful analysis of the systematic risk factor exposure, strategy-specific and relative risk associated with deviating from a cap-weighted index (such as tracking error), which allows investors to choose their risk exposure areas. "There is a clear benefit to investing in smart beta strategies from a return and cost perspective as they provide differentiated strategies that are required for a well-diversified portfolio." "They deliver on a risk-adjusted return basis, while the methodical construction leads to a very cost-effective solution," concludes Breda. (...)"