Aggregating ETFs designated as ‘smart beta’ in a composite portfolio demonstrates that the term does not lead to the definition of an asset class with specific risk/return attributes.
The latest annual ETF and smart beta survey from EDHEC-Risk Institute has revealed almost all ETF investors plans to increase their use of smart beta strategies over the coming three years.
Institutional investors are allocating to ETFs more than ever driven by market volatility, concerns about liquidity in the bond space and a desire to take advantage of the latest bouts of outperformance, according to a study conducted by Greenwich Associates.
Moody’s has published a report forecasting that passive funds will surpass 50% of the investment market in the US by 2024 at the latest, given the growth trends in this area of the market and the outflows from active funds. The agency foresees a similar growth pattern in other areas of the world, too, albeit from a lower starting point.
Smart beta has been a hot topic for investors this year as they seek to maximise returns in a low-yield world, but despite its growing popularity some investors remain unconvinced smart beta products can outperform the traditional market-cap weighted approach.
Smart Beta or Alternative Beta, one of the hottest topics in recent years, has been drawing investors’ attention and confronting them at the same time with a flow of information which is often difficult to analyse.