POWERED BY MOMENTUM MEDIA
Smart-beta usage reaches record high
Adoption of smart-beta strategies has reached a record high with 58 per cent of institutional investors using this type of strategy, as concerns about the long-term track records of these products diminish.
Research by the FTSE Russell surveyed 178 asset owners globally and found growth in smart beta usage was reported in all AUM tiers and across all geographies.
The figure rose to 78 per cent when it included investors who were actively planning to use one in the future.
In particular, uptake of multi-factor strategies had tripled since 2015 with 71 per cent choosing this as their smart beta vehicle of choice over low volatility or value strategies.
The reason for the growth, FTSE Russell said, was asset owners were becoming more comfortable with these type of assets and viewing smart-beta as similar to active rather than passive strategies as well as adopting them for cost-saving purposes.
Rolf Agather, managing director for research & innovation at FTSE Russell, said: “Risk reduction, return enhancement and improved diversification continue to drive smart beta adoption among institutional investors globally. Within smart beta, multi-factor index-based strategies have undoubtedly been the market’s favoured choice, with uptake more than tripling since 2015. We expect sustained growth in smart beta, especially when it comes to multi-factor combination strategies.”
Looking ahead, many said they intended to include ESG considerations into their smart-beta products in order to avoid long term risk, an integration move the organisation described as ‘smart sustainability’.
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
Recommended for you
Services and software companies are set to reap the benefits of the AI boom in 2025, according to a market professional.
Despite ongoing tariff concerns, the State Street Risk Appetite Index rose to 0.36 in January, signalling a return to risk-seeking behaviour after a pause in December.
The yellow metal is riding a perfect storm of macroeconomic and political conditions, setting the commodity up for further growth this year.
While investors remain bullish on the US dollar and equities, they are bearish on just about everything else, Bank of America has found.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
2
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.78 3 y p.a(%)
3
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
4
Global X GlobalX FANG+ ETF
30.80 3 y p.a(%)
5
Fidante Credit Suisse Global Private Equity
28.31 3 y p.a(%)
