Smart Beta 2016

A row broke out this year when a pioneer in the sector warned that as smart beta funds grow in size, certain products could go ‘horribly wrong’. Funds Europe looks at what lay behind the controversy – and asks what safeguards there are for investors.

The problem with backing a smart beta factor – such as a low volatility fund, for example – is that the factor could become more expensive as it gains in popularity, eroding any advantages, say experts.

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

There is no doubt that Smart Beta ETFs are gaining traction in Europe. In June 2016, they reached €19.7 billion in Assets under Management, up 31% versus the end of 20151. In this article we look at what is driving the rise, and how investors could capitalise on it.

Smart beta has its roots in equity investment but is also making headway in fixed income. Some providers suggest it could even be better suited to capturing bond market factors. Funds Europe explains.

Manuela Sperandeo tells Funds Europe why the rationale for smart beta investing is as strong as ever and is here to stay.

Renowned economist Bill Sharpe said the term smart beta ‘makes him sick’. Even some of its practitioners are uncomfortable with it. Kit Klarenberg investigates why people cannot agree on the right way to name the vehicle.

It’s often asserted that multi-factor smart beta strategies can perform in all market conditions, but are such forecasts credible, or pure hot air? Kit Klarenberg investigates.

Sponsored Profiles

SPONSORED FEATURE: Smarter than beta

Jun 14, 2017

‘Smart beta’ investing is rapidly becoming a popular alternative to both conventional passive management and traditional active management.

SPONSORED FEATURE: Smart beta: Unlocking key drivers of return

Jun 14, 2017

Manuela Sperandeo, iShares Head of Specialist Sales EMEA, tells Funds Europe how investors can leverage smart beta strategies to target numerous outcomes.

SPONSORED FEATURE: Minimum variance indices: Rewriting the rules

Jun 14, 2017

The FTSE Russell indices tracked by lyxor lead to fewer specific risks, fewer valuation and crowding issues and more consistent performance.

SPONSORED FEATURE: The reflationary environment

Jun 06, 2017

Funds Europe talks to Andreas Wosol about the implications of a return to reflation and why the value part of the European equity market could support investors in such an environment.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.

Roundtables & Panels

TRENDING: Smart beta indices continue onward march

Jun 14, 2017

We asked five investment experts how smart beta indices have performed against cap-weighted indices over the past year and what the investment outlook suggests about the prospect for different investment factors.

SMART MONEY: Following the smart money

Jun 14, 2017

We asked six investment professionals about the emphasis they are placing on smart beta and active ETFs and how platforms are adopting these products.