We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".



Twitter board

Follow us
  • More and more pension schemes are increasing their allocations to private equity, but will the illiquid strategy br… https://t.co/8l8TI75r9v23 hours ago
  • Border to Coast Pensions Partnership CEO Rachel Elwell tells Mona Dohle about the challenge of developing a common… https://t.co/nQZfFveQdzyesterday
  • Out now- The portfolio institutional October issue featuring our cover on ESG and fixed income: Breaking new ground… https://t.co/hnmwYclXS52 days ago
  • Friday View: ESG in fixed income: The new frontier - LGPS bolster infrastructure collaboration - EM Roundtable: The… https://t.co/zxvEKaZkoM5 days ago
  • Local government pension scheme (LGPS) pool Border to Coast has appointed the first external managers for its £1.2b… https://t.co/eBAbx0ubzJ5 days ago
  • "Investors seduced by the impressive growth forecasts for emerging market economies should prepare themselves for a… https://t.co/7nAnrL8s7t7 days ago
  • "New RPMI Railpen chief investment officer Richard Williams talks to Mona Dohle about restructuring the scheme’s in… https://t.co/T1Xgvnx6Y410 days ago
  • Friday View: Pension funds turning to smart beta - Europe's fund managers ready for Brexit - Master trust rules rai… https://t.co/wZS8qe41Ci12 days ago
  • "The UK leaving the European Union will have a limited impact of the continent’s fund management industry, a former… https://t.co/tel0BRmGKX12 days ago
  • Pension schemes have had enough of high fees and poor returns. Is smart beta their chance of something better? Re… https://t.co/CzqPANU8D814 days ago
  • Read our latest roundtable where we brought fund managers, consultants and trustees together to discuss diversified… https://t.co/3TRGdybVwX16 days ago
  • Friday View: Lothian's alternative to pooling - Master trusts: The consolidation game - Whistle blower revelations… https://t.co/jbU9tbveK219 days ago
  • New authorisation rules are driving consolidation among master trusts, but what effect will this have on the DC mar… https://t.co/wQcgDpIvzs23 days ago
  • Friday View: Piecing together the pooling puzzle- DGF Roundtable - Royal Mail names pensions boss -LGPS Central sel… https://t.co/DPfZ3WUv6K26 days ago
  • portfolio institutional is launching a new series on LGPS pooling, tracking changes to investment strategies and up… https://t.co/Ld04PZ2TNK28 days ago
  • Friday View: ESG: What lies beneath? - Industry backs DWP's ESG push - LGPS Central CEO to step down - Railpen hire… https://t.co/S3knBieob033 days ago
  • Out now- The portfolio institutional September issue feat our cover on ESG: What lies beneath? -Interview: Railpe… https://t.co/x9EYxDVXEl37 days ago
  • Friday View: LGPS pool appoints CIO - Jack Dromey on cost reporting - TPR hires former FCA director - NEST issues p… https://t.co/aNVGQqK35Z40 days ago
  • RT @AonRetirementUK: How prepared is your portfolio? Read a write-up of the discussions at our recent event with @portfolio_inst, along wit…43 days ago
  • "Shadow pensions minister Jack Dromey comments on the need to set compulsory standards for cost reporting." Read m… https://t.co/vH1gGZBm1q43 days ago

ETF and Passive

Smart moves: Pension funds considering smart beta

Smart moves: Pension funds considering smart beta

Mark Dunne
Tuesday 12th June 2018

An increasing number of pension schemes are adopting a more efficient way of investing.

Smart beta is shedding its tag as a niche investment strategy. Although not considered a mainstream ingredient by pension schemes when constructing a portfolio, more institutional cash is flowing into funds that track indices biased towards factors rather than the more traditional market cap benchmarks.

Indeed, exchange-traded funds (ETFs) provider iShares claims that half of institutional investors globally are using smart beta in their portfolios in the hope of generating higher returns for lower fees. In a sign of how rapidly appetite is increasing for the asset class, this figure expanded by 36% to 50% during 2017.

RPMI Railpen, asset manager for the Railways Pension Scheme, has allocated more than £700m to the asset class, while Hong Kong’s Hospital Authority Provident Fund Scheme (HAPFS) also has sizeable exposure to the market.

Demand is expected to continue climbing. At the start of this year, the smart beta market was worth $729bn (£548bn), representing 17% of all ETFs globally. Yet iShares believes that the value of the market will double to $1.4trn (£1trn) by 2022.

The most popular factors are reported to be fundamentals, income, low volatility, value, smaller companies, momentum and businesses with strong balance sheets and reliable revenues. Other more niche factors include emerging markets, credit spreads and commodity prices. It appears to be a question of if the market wants it; an asset manager will create it.

And creating it they are. Asset managers launched 67 smart beta ETFs globally in 2017.

Smart beta is part of a wider success story. It only accounts for 38% of the broader factor investing market, which is forecast to reach $3.4trn (£3.2trn) by 2022, up from $1.9trn (£1.4trn) at the start of this year. Expanding by 11% a year since 2011 makes factor investing one of the fastest growing areas of the asset management universe.

Page: 1 2 3 4

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!