Scientific Beta

Financial Standard: "Surveys by the business school of the EDHEC-Risk Institute in France show that 40% of institutional investors are using smart beta-type index approaches in their equity portfolios."

Financial Standard 05/06/2013

(...) Investment research house Lonsec believes Australia can expect the market for exchange traded funds (ETFs) tracking "smart beta" or non-traditional indices to grow in popularity as a focus on risk since the global financial crisis has resulted in greater demand for volatility targeted equity products. Smart beta indices reject traditional market capitalization index weights in favour of other rules-based weightings designed to isolate a particular performance characteristic. Surveys by the business school of the EDHEC-Risk Institute in France show that 40% of institutional investors are using smart beta-type index approaches in their equity portfolios. Lonsec general manager of specialised research Michael Elsworth said smart beta ETFs are on the rise because they represent a cost efficient way of investing in active management. "Smart beta ETFs resemble passive investments, but the deviations from capitalisation weighted indices reflect active investment decisions," Elsworth said. (...)