Assets linked to EDHEC-Risk Institute’s smart beta indices pass $8bn

Jul 21st, 2015 | By | Category: ETF and Index News

Assets tracking the smart beta indices of the EDHEC-Risk Institute have risen to over $8bn, with the success of their Multi-Beta Multi-Strategy offering, available in ETF format from Amundi and Morgan Stanley, helping to drive triple-digit growth over the past 12 months.

Assets linked to EDHEC-Risk Institute's smart beta indices reach $8bn

Professor Noël Amenc, Director of EDHEC-Risk Institute and CEO of ERI Scientific Beta.

This success has been underlined by the outperformance of their initial smart beta offering (so-called “Smart Beta 1.0”) , which has delivered outperformance of 2.1% over the last five years.

Now with the addition of their “Smart Beta 2.0” methodologies, which attempt to provide more advanced diversification of smart beta risks and seek to mitigate unrewarded risks, the institute expects to surpass $12bn in assets under advisement.

Noël Amenc, who will be leaving the EDHEC-Risk Institute to lead its indexing arm, Scientific Beta, from August 2015, commented: “Smart beta is a commoditisation of two essential contributions from modern portfolio and asset pricing theory, namely allocating to factors that are well rewarded over the long term and reducing unrewarded risks through diversification. These two ingredients are the core of the Smart Beta 2.0 offering marketed by Scientific Beta.”

Smart beta investing is receiving considerable investor attention, with the Scientific Beta online platform recording over 17,000 frequent visitors who use the platform to analyse the performance and risk of smart beta strategies. According to EDHEC-Risk Institute, it is integral that these strategies be fully transparent; a recent survey carried out by the institute showed 88% of respondents agreed that full transparency on methodology and risk analytics is required. As an advocate of transparency, the institute provides free and unrestricted access to all performance data, historical compositions and construction methodologies of their Scientific Beta indices.

Scientific Beta’s flagship Multi-Beta Multi-Strategy index offers investors exposure to a sophisticated smart beta strategy which blends four stock selection factors (volatility, valuation, size and momentum) with five smart beta diversification strategies. By diversifying across factors, the strategy attempts to smooth the time-varying relative performance of the individual factors. It could constitute a core holding for long-term investors looking for global equities exposure and the opportunity to outperform capitalisation-weighted indices.

The strategy can be accessed in an ETF structure via the Morgan Stanley Scientific Beta Global Equity Factors UCITS ETF (GEF LN) and the Amundi ETF Global Equity Multi Smart Allocation Scientific Beta UCITS ETF-A EUR (SMRT FP).

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