Staff
Smart beta strategies are playing a more influential role in some of the world’s largest portfolios, according to a State Street Global Advisors study.
The study finds that 42% of investors currently use smart beta, and another 24% plan to do so over the next three years.
Seventy-five percent of the investors surveyed said that the strategies are an attractive alternative to both active and passive fund management and a powerful evolution in asset allocation strategies.
Other key findings from the report show the following:
- although smart beta is often marketed as an alternative to cap-weighted indexing, many investors see smart beta as a replacement for active and are three times more likely to fund a smart beta allocation from active rather than passive;
- Europe is ahead of other institutional investors in adoption, allocation and measurement of smart beta strategies with 25% of European respondents allocating 20% or more of equities in their portfolio to smart beta as compared with 4% for North American respondents;
- nearly 40% of investors with a current allocation to advanced beta strategies are using low volatility and low valuation, either combined or separately; and
- while 70% of investors report high levels of awareness about advanced beta, only 40% are confident about implementation.
The study surveyed 300 institutional investors from North America and Europe.
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