Scientific Beta

Portfolio Adviser: "In an unprecedented move, ERI Scientific Beta, a provider of smart beta indices that is an offshoot of the EDHEC Risk Institute in France, today announced it will offer its mandate clients the option to only pay performance fees."

Portfolio Adviser 26/05/2016

"(...) In an unprecedented move, ERI Scientific Beta, a provider of smart beta indices that is an offshoot of the EDHEC Risk Institute in France, today announced it will offer its mandate clients the option to only pay performance fees. From the 1st of June, clients will get the option to pay zero fixed fees and a performance fee of 20% on all outperformance the EDHEC indices achieve compared to their cap-weighted counterparts. Though EDHEC predicted its move “will disrupt the traditional model of fixed fees on assets under management”, it expects existing mandate clients will not take up the offer. “We will propose this new option to all our clients, but they have all had outperformance [over the past three years]. So they will probably not sign up for the zero fixed fees model,” said Noël Amenc, CEO of ERI Scientific Beta. The new pricing model is targeted at attracting new clients instead, as ERI hopes the option of zero fixed fees will convince prospective clients to test the waters of smart beta. “Large numbers of asset owners stay out of smart beta because they think fees are too high for a product that is perceived as passive,” Amenc explained. (...)"