Scientific Beta

Private Wealth Canada: "Investors are familiar with the construction principles of advanced beta strategies, but less familiar with underlying risks and drivers of performance, says an EDHEC-Risk Institute survey."

Private Wealth Canada 10/08/2015

"(...) Investors are familiar with the construction principles of advanced beta strategies, but less familiar with underlying risks and drivers of performance, says an EDHEC-Risk Institute survey. This lack of knowledge on risks poses a problem not only for the proper use of these alternative equity beta strategies, but also with respect to them being fairly marketed. As well, respondents allocate relatively few resources to the evaluation of alternative beta. The average respondent uses fewer than two full-time staff (1.77) to evaluate alternative beta offerings, a much lower number than that used to evaluate active managers (3.42). It says this shortfall in resources is illogical given that the same respondents see bigger challenges when evaluating advanced beta offerings than when evaluating active products. It found a lack of access to data, in particular live and after-cost performance, is seen as a key challenge as for all types of risks, respondents agree that information is not widely available from product providers. (...)"