Scientific Beta

Portfolio Adviser: "Respondents highlighted methodology and risk analytics processes as the primary areas requiring increased clarity, with the vast majority of investors unsure as to how potential smart beta investments operate."

Portfolio Adviser 25/06/2015

"(...) Nine out of 10 investors are harbouring major concerns over the lack of transparency in the smart beta ETF space, according to research by EDHEC-Risk Institute. The report, which surveyed 222 professional investors across the UK and Europe and was published 23 June, showed that 88% of those questioned saw a lack of transparency around smart beta indices as a “major concern”. Respondents highlighted methodology and risk analytics processes as the primary areas requiring increased clarity, with the vast majority of investors unsure as to how potential smart beta investments operate. Furthermore, 82% of those questioned outlined capturing factor premia as their main priority when investing in smart beta ETFs, putting forward – in order of importance – ease of implementation, low turnover and transaction costs, a rational risk premium, and documentation of the factor premium in empirical literature as aspects they look for when considering products. (...)"