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 articles

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

CEO INTERVIEW: Munro gains three-year track record

Mar 16, 2017

Aviva Investors’ annual results this month were the third set since Euan Munro took over as CEO. Nick Fitzpatrick speaks to him about the ‘Aims’ fund at the heart of the firm’s outcome strategy.

DISTRIBUTION INTERVIEW: Tales of the unexpected

Mar 16, 2017

Laurence Terryn, a fund selector at Candriam, tells David Stevenson how the twists and turns of the past year’s macro environment flavoured her approach to fund selection.

Roundtables

ASSET SERVICING ROUNDTABLE: Under pressure

Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.