Smart Beta on the Rise

Asset owners increase exposure to factors.

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Adoption of smart beta among global asset owners continues to grow with nearly half (46%) reporting an existing smart beta allocation and, of those, a large number (63%) who say they plan on adding more.

The report, from FTSE Russell, also confirms that North America still lags the Europe in adoption and the largest uptake comes from investors with $1 – $10 billion in assets under management. That’s a big leap from last year, when the biggest jump in smart beta adoption came from smaller asset owners with less than $1 billion.

Environmental, social, and governance factors dominate in Europe where nearly 80% of asset owners apply such considerations to their smart beta strategy – only 30% do so in North America.

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Asset owners cite return enhancement and risk reduction as the main reasons for using smart beta but cost savings continues to become more important.

Multi-factor combinations have quickly grown in popularity but single factors persist with value and low volatility being the most widely used. The next big trend could be fixed income notes FTSE Russell, however what’s missing here is a well-defined set of factors applicable to debt markets.

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You can access the survey here.

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Transcontinental Media G.P.