Scientific Beta

Pensions & Investments: "Having indirect ownership of companies will allow institutional investors to add value to the companies, which is far more difficult than investors give general partners credit for, said Michael Aked, the Melbourne-based senior investment strategist at Scientific Beta, an index provider specializing in smart beta strategies."

Pensions & Investments 12/01/2024

"(...) Having indirect ownership of companies will allow institutional investors to add value to the companies, which is far more difficult than investors give general partners credit for, said Michael Aked, the Melbourne-based senior investment strategist at Scientific Beta, an index provider specializing in smart beta strategies. (...) In addition, the skill sets of the in-house teams that superannuation funds hire is unclear. There are a limited number of asset managers that have appropriately trained and experienced portfolio managers, and the ability of superannuation funds to properly compensate these individuals is an open question, he said. "If they are implementing a simple factor-type portfolio, that would be great. You can do that at size with very small teams," Aked said. "But you will need to have contact with thought leaders to make sure your investment strategies are continually updated and actually invested in a way that is aligned with the newest ideas. To do that you need to have partnerships that are more give than take, or than just extracting (intellectual property) capital," he said. Investing alongside a factor or smart beta manager could be beneficial since many professionals in the space are continually researching and working with professors from universities, he added. "Factor investing is unique as it has the academic rigor of the asset pricing literature. As new asset pricing ideas are fomented in academic circles, having the knowledge and machinery to convert these ideas into portfolios require true partnerships where all parties are adequately rewarded," he explained. (...)"