Now in its sixth year, the FTSE Russell global institutional survey provides unique insight into major trends in awareness, popularity and the use of smart beta among global asset owners. This year it has produced an additional report that examines the integration of ESG into smart beta strategies by asset owners.
Factors have become an influential force in investors’ decision-making processes, buttressed by a growing body of academic and financial industry research that has affirmed the effectiveness of factors in driving risk and returns.
On Monday, June 24, global index provider FTSE Russell will add the China A shares of approximately 1,090 Chinese mainland stocks to the FTSE Global Equity Index Series. Notably, more than one third of these stocks (376) are small cap, with the rest qualifying as mid- and large-cap.
Academic research has demonstrated the existence of what is known as the “size” or “small-cap” premium beginning over 30 years ago. Today many investors take it as given that small stocks will outperform large stocks based on this foundational principle of finance. It is a rational expectation, since small stocks are demonstrably more risky than larger stocks, so they should provide investors with additional compensation for bearing this risk in the form of extra return.
The FTSE Global Equity Index Series (FTSE GEIS) targets coverage of over 99% of the global investable opportunity set, including large, mid, small, and micro cap companies across both developed and emerging markets.