Last year, Russell Indexes published the results of a survey (Smart Beta: A deeper look at asset owner perceptions) about the perceptions and adoption of smart beta among nearly 200 institutional asset owners in Europe and North America. More recently, a new report was published containing additional insights into how smart beta is being implemented, focusing on the survey responses of over 50 asset owners that currently have smart beta allocations (Smart Beta: asset owner implementation strategies).
The broad concept of smart beta has become a ubiquitous topic in recent years in the media and among investment practitioners. However, it’s important to remember that ‘smart beta’ does not denote a single investment strategy, but rather several distinct strategies. Each strategy has a unique objective and set of characteristics that enable investors to more precisely construct their portfolios as they seek specific outcomes, such as return enhancement, risk reduction, income generation or improved portfolio diversification. Among these strategies are weighting by company fundamentals as well as various factor strategies such as low volatility, momentum, quality and value.
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