The overview provides a detailed summary of the corresponding paper that discusses how to implement a completeness portfolio using different case studies and illustrates the impact that it can have on an asset owner’s existing portfolios.
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This paper shows that the claims by Blitz and Marchesini (2019), who question the investability of factor indices and argue that active management is needed to avoid capacity issues, do not hold for the following reasons:
What motivates equity ESG investment strategies is the ability to influence the behaviour of companies through the portfolio decisions that they lead to. To this end, it is often argued that an investor who is dissatisfied with a company’s ESG behaviour, and who wishes to remedy the situation, needs to stay on as its shareholder and engage with it.
A recurring criticism of smart beta strategies is the presumption of a risk of “crowding”. It is frequently pointed to as a potential risk but is rarely formalised or even defined.
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