Scientific Beta

IPE: "Beyond the question of costs lies the issue of performance. As Noël Amenc, director at EDHEC-Risk Institute says, index providers traditionally justify the use and costs of alternative benchmarks by claiming they outperform cap-weighted indices. “But, investors should be aware that smart beta benchmarks can also have periods where they underperform,” he says."

IPE 03/06/2013

(...) Swiss pension funds have mostly shied away from alternatively weighted benchmark strategies. Cécile Sourbes finds that adoption will depend on thorough analysis and transparency of data (...) Beyond the question of costs lies the issue of performance. As Noël Amenc, director at EDHEC-Risk Institute says, index providers traditionally justify the use and costs of alternative benchmarks by claiming they outperform cap-weighted indices. “But, investors should be aware that smart beta benchmarks can also have periods where they underperform,” he says. “As a result, investors should have access not only to the performance data provided by index providers but also to the risks to which those indices are exposed,” he adds. (...)