FTSE Russell

Insights | The anatomy of smart beta

Key findings from the FTSE Russell 2016 Smart Beta Survey

The survey covered 250 asset owners from North America (49%), Europe (33%) and Asia Pacific and elsewhere (18%), with total assets under management of over US$2 trillion. Its key findings were:

  • 72% of asset owners are now using or evaluating smart beta, up from 44% a year earlier
  • Return enhancement, risk reduction and increased diversification remain the primary objectives for those implementing smart beta allocations
  • Cost savings were cited by more than a third of the largest asset owners as a reason for evaluating smart beta
  • Asset owners increasingly view smart beta as part of their active equity allocation
  • Low volatility, value, multi factor and fundamental indexes are the most commonly used smart beta strategies

Smart beta indexes have become increasingly popular in recent years, with nearly three-quarters of global institutional investors and asset owners now either using or evaluating smart beta index based strategies for their portfolios.

Smart beta is a generic term for indexes constructed using a variety of approaches other than the standard method of weighting index constituents by their market capitalization. These indexes capture a variety of exposures to academically recognized drivers of risk or reward, helping users gain more control as they fine-tune their portfolios toward achieving specific investment objectives. In this FTSE Russell Insights we examine the origins of smart beta, consider the variety of indexes on offer and their uses, and look into the future of this type of index.

Read the complete white paper at the link beneath Related Files

Related Files

Head Office
10 Paternoster Square
London
EC4M 7LS
United Kingdom
Company website:
https://ftserussell.com

What’s new

  • Why climate change also matters for government bond investing

    Why climate change also matters for government bond investing

    White papersMon, 11 Nov 2019

    The global sovereign debt market is one of the largest asset classes in the world, and yet it has typically lagged other asset classes when it comes to integrating climate change considerations.

  •  No place like home: sizing up investment home bias in pension fund allocations

    Blog | No place like home: sizing up investment home bias in pension fund allocations

    White papersThu, 24 Oct 2019

    One would not expect that returns from equity investment by some of the world’s most highly-sophisticated institutional investors would be unduly domestically-focused, to the detriment of returns, but research from FTSE Russll suggests exactly that.

  • bond yields, zombies and unintended consequences

    Blog | Trapped near zero: bond yields, zombies and unintended consequences

    White papersThu, 24 Oct 2019

    When Japanese interest rates first fell towards zero, the Japanese government yield curve steepened sharply as it was assumed temporary, and that interest rates and bond yields would rapidly “normalise” or mean revert at levels more typical of the 1980s and ’90s. With about a 20-year lag, the Eurozone now appears to be experiencing the same phenomenon, and has met similar policy responses.

  • Canada, climate change & fixed income markets

    Blog | Canada, climate change & fixed income markets

    White papersThu, 24 Oct 2019

    A new FTSE Russell index measuring the impact of climate change on global fixed income markets is revealing how Canada ranks compared to other developed nations on climate readiness and provides insight into the biggest climate-related risks facing Canadian investors.

  • Appraising home bias exposure

    Appraising home bias exposure

    White papersTue, 22 Oct 2019

    Studies have shown that pension funds have inherent biases to their domestic markets within their equity allocations. In this paper, FTSE Russell seeks to understand the impact of home bias in the equity allocations of five large pension fund markets—the US, UK, Japan, Canada, and Australia—by examining the extent of their home biases and analyzing their effects over a 12-year period.

Search all our content