Smart Beta: A Deeper Look at Asset Owner Perceptions showed that asset owners in North America and Europe were actively using smart beta indices in strategic and tactical ways to pursue a wide range of investment outcomes.
Rolf Agather, managing director of global index research and innovation for Russell Investments said: “Our survey confirms that smart beta indices and investment strategies are clearly gaining traction among asset owners. However, effectively integrating smart beta strategies within a broader portfolio requires that an asset owner maintain standards of assessment and ongoing review similar to those associated with any active strategy.”
The survey found 40% of European respondents reported smart beta allocations, compared to 24% in North America. However, use of smart beta indices and smart beta index-based investment strategies among European investors was broad-based. In Europe, only 15% of asset owners did not expect to evaluate smart beta in the next 18 months, compared to 34% in North America.
Of the asset owners managing more than $10bn (35% of survey participants) smart beta indices were being sought primarily for risk reduction and return enhancement rather than basic cost savings.
The survey included input from nearly 200 equity investment decision makers across a broad spectrum of pension schemes, endowments and foundations of different asset sizes and regions in different stages of their evaluation and adoption of smart beta. Of the 181 survey respondents, more than half (52%) were European asset owners.
Sorca Kelly-Scholte, managing director client strategy & research for Russell Investments Europe said: “While it may feel at times like we have been speaking with clients for years about smart beta indices, we are still very much in the early days. Although the results of our survey confirm that outcome-oriented European investors are embracing smart beta index tools, this growth means that our clients have a greater need for insight on how to determine the best smart beta implementation strategy.”