Growing Group of Asset Managers Embrace the Adoption of Smart Beta

smartbetaSmart beta strategies continue to gain significant ground among institutional investors such as sovereign wealth funds, pensions and other pooled retirement funds. Jokingly, a number of fundamental managers may perceive smart beta as the blackest black magic; however, it is garnering the short-spanned attention of asset manager chief executives.

Recently, Victory Capital Management acquired the business of Tennessee-based Compass Efficient Model Portfolios, LLC, a firm specializing in smart beta. In Europe, smart beta appears to be the fountainhead of growth for ETF products. In November, State Street Global Advisors (SSgA) launched one of the first UCITS smart beta multi-factor funds. The Luxembourg-domiciled fund called Multi-Factor Global Equity Fund follows a strategy of low volatility and valuation, latticed with high-quality stocks. In November, WisdomTree launched two new UCITS ETFs, WisdomTree Emerging Markets Equity Income UCITS ETF and WisdomTree Emerging Markets SmallCap Dividend UCITS ETF, providing investors smart beta products which are in demand. Smart beta funds offer factor nourishment for institutional investors to exposures such as volatility, earnings and momentum. Smart beta strategies are packing a swift uppercut on active fundamental managers who can suffer from mean reversion over time.


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