Investors to increase smart beta and ETF use

Over 90% of investors plan to increase their use of smart beta strategies, according to research by the EDHEC-Risk Institute.

The finding is part of EDHEC-Risk’s 10th annual European ETF and smart beta survey. It also found that over 60% of investors plan to increase their use of ETFs, with lower cost being the main driver for this. The results are based on the views of over 200 ETF and smart beta investors. The survey also found that investors want to see ETFs based on smart beta indices, multi-factor indices and single factor indices. Investors also said that they think further product development is needed in fixed income and alternative assets, as well as more customised solutions. Overall, the research found investors use ETFs for broad market exposure and see quality of replication and cost as key factors when using ETFs.

Professor Lionel Martellini, Director of EDHEC-Risk Institute, commented: “The survey confirms that transparency and the possibility of making explicit choices on risk exposures are key drivers behind investors’ growing appetite for smart beta. At the same time, the industry yet has to make progress on offering better insights into risks and more flexibility to allow investors to fully exploit the potential of smart beta strategies.”